Andrew Pyle, a fund manager at ScotiaMcLeod Inc.in Peterborough, Ontario said Bombardier is still facing an uphill battle to win over investors.
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“We said we would have to look at the business case”.
Out of the blue came Bombardier and Air Canada to announce that the airline had signed letters of intent to buy 45 of Bombardier’s CS300 aircraft with options for another 30. It would also be the first order from a major North American airline, which sends a very positive signal.
To overcome cost overruns, on Wednesday, Bombardier said it is cutting about 7,000 jobs, or 11% from its workforce of about 64,000.
Chamberlin added that if Canada wants to get out of the boom-and-bust cycle of oil and to have an economy that relies less on extracting resources from the ground, supporting global industries such as Bombardier is essential.
“You can do the math – that is the reason why countries around the world invest in aerospace”, Bellemare told The Canadian Press in an interview in Montreal. Bombardier announced that the company will execute a reverse share split, resulting in a share price of $10-20.
Fred Lazar, an aviation expert at York University’s Schulich School of Business, says the outlook for Bombardier remains bleak. “I can not underestimate the positive impact that this will have on the program”.
Fourth-quarter profit fell as the company broke even on a per-share basis, Bombardier said Wednesday, less than the 2-cent average of 15 analyst estimates compiled by Bloomberg.
In other words, it’s all good – especially when the objective is to sell the Trudeau government on the merits of keeping an old economic idea alive.
In Quebec City, Premier Premier Philippe Couillard defended his government’s decision to inject the money into Bombardier’s CSeries commercial aircraft unit without taking an ownership percentage in the company’s rail sector. Swiss will be the launch customer of the CS100, and the aircraft is expected to enter service in the first half of the year. No jobs will be cut at Commercial Aircraft and 500 will go in Business Aircraft, around 220 of them at Wichita.
Bombardier reported Wednesday it was slashing more than a tenth of its workforce around the globe through next year. The plane maker also said it will cut about 7,000 jobs over the next two years.
Bombardier’s ugliest numbers concern its free cash flow usage. Earnings before interest, taxes, depreciation, amortization and aircraft rent (EBITDAR) amounted to $2.534 billion compared to $1.671 billion in 2014.
The Quebec government is putting up $1 billion (U.S.) for a 49.5 per cent stake in the CSeries program, while the Caisse de depots et placement du Quebec, the pension plan, spent $1.5 billion (U.S.) for a 30 per cent stake in the company’s train division.
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Mr. Garneau insisted Ottawa was not involved in the deal making between Air Canada and Bombardier other than its pledge to modernize the Air Canada Act. Whether the company can keep up the momentum is another matter.
