Bombardier to cut up to 7,000 jobs but signs jet deal with Air Canada for 45 CSeries

Montreal-based Bombardier plans to cut its workforce by up to 7,000 people even as the company has finally signed a deal to sell its CSeries jets to a major North Americanairline.

Bombardier said Wednesday up to 2,000 of the total cuts will be contractors.

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Most of the job losses will be in Canada and Europe and be partly offset by hiring in certain areas, such as its newCSeriesaircraft program. Worldwide, Bombardier currently has3,450 people working in its CSeries division, a figure the company expects to rise as it ramps up sales and production.

The company has 64,000 employees globally.The aerospace and rail equipment companysays the job cuts will begin in the coming weeks and be completed by 2017.

Bombardier cuts deep

9 years ago

Duration 1:56

Ainslie MacLellan reports on the loss of 2,800 jobs in Quebec and Ontario, even as Bombardier wins an order from Air Canada

The number of jobs affected include:

• 3,200from its transportation division.
• 2,500from itsaerostructuresand engineering services division.
• 800 from its aerospace product development engineering group.
• 500 from its business aircraft unit.

The company said no jobs will be cut from its commercial aircraft unit, which includes the CSeries.

"I just hope theCSeriesramps up quick enough so that anybody who's laid off will be called back to work as quick as possible," said DaveChartrand, Quebecco-ordinatorfor thetheInternational Association of Machinists and Aerospace Workers,whichrepresents 4,500 workers in the province.

The federal government has been rumoured to be considering offering a bailout to the aerospace giant, similar to the$1-billion lifeline that Quebec offeredlast year.

Air Canada to buy CSeries jets

But in announcing the layoffs, Bombardier also revealedan Air Canada order for the largest model of Bombardier's newCSeriesjets.

Air Canada has signed a letter of intent to purchase 45 of Bombardier'sCS300aircraft with options for an additional 30 planes.Based on the list price of theCS300, Bombardier says a firm order would be worth about $3.8 billion.

Once a firm purchase agreement is in place, Bombardier says Air Canadawill become the first mainline, international North America-based carrier for the CSeries family of aircraft. Deliveries are scheduled to begin in 2019.With the Air Canadaagreement, Bombardier saidit now has orders and commitments for a total of 678 C Series planes.

"Air Canada's commitment is a strong endorsement of this outstanding aircraft," Bombardier president and CEO AlainBellemaresaid in a release.

"It will create significant value for Air Canada and its customers and will become a catalyst for future orders in North America and around the world,"Bellemaresaid.

Transport Minister MarcGarneautold reporters in a scrum on Wednesday that Ottawa exerted "no pressure" in getting the carrier to buy jets from a key Canadian supplier such as Bombardier.

Garneau added that Ottawa will now seek to clarify the law, known as theAir Canada Public Participation Act, which among other things limits the amount of foreign ownership allowable in Canadian Airlines. Air Canada hasbeen lobbying for Ottawa to scrap the 30-year-old legislation.

Garneau saddened by Bombardier layoffs but buoyed by Air Canada's large order of its C-series jets

9 years ago

Duration 2:03

Transport Minister Marc Garneau spoke to reporters about the state of Bombardier outside the Government Caucus room

Navdeep Bains, Canada's minister of innovation, science and economic development, said Wednesday:"We are continuing our dialogue with Bombardier on its request for federal assistance. Any action the government takes with respect to Bombardier will be first and foremost in the interest of Canadians. We have been clear that such an important decision will only be made after due diligence, careful consideration and a strong business case."

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Bombardier released both pieces of news while reporting its quarterly results, which showedthat its 2015 revenue was $18.2 billion down from $20.1 billion in 2014.

Revenue in the fourth quarter ended Dec. 31 was $5 billion, down from just under $6 billion a year earlier.

Stock consolidation

Bombardier also announced plans to consolidate its shares, which have sold offheavily on the TSX since the start of 2015 asCSeriesdelays began to mount.

From $4 a share 18monthsago, Bombardier's shares have slid to as low as 80 cents in recent weeks, which is a problem for the company,since it puts them in danger of being delisted from the TSX for being too cheap. That can cause a new round of selling of the shares as many funds are mandated to only buy shares listed on the index.

But under Bombardier's new proposal to shareholders, the company will do a reverse stock split that will consolidate shares and put the individual price of each one to between $10 and $20.

The actual value of any given investor's stake won't change, however.

Should feds bail out Bombardier?

9 years ago

Duration 12:19

MPs Kate Young, Maxime Bernier and Guy Caron discuss the job losses at Bombardier and whether the federal government should bail out the company