Bombardier and Air Canada announced today that they have signed a Letter of Intent (LOI) for the sale and purchase of 45 CS300 aircrafts with options for 30 more.
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Almost half of the job cuts (3,200) will be in its transportation segment; about 2,500 will be in its aerostructures and engineering segment. In return, the airline agreed to conduct maintenance on CSeries jets in the province. This makes it a competitor not only in the regional jet market, but also a rival to the Boeing 737 and Airbus A320 aircraft.
A spokesman said: ‘In the United Kingdom we need to continuously match our workforce to workload.’ It did not say which sites would be affected.
He said the government didn’t pressure Air Canada to buy the CSeries planes.
Transport Minister Marc Garneau said the end of the lawsuit will allow the federal government to “clarify” the Air Canada Public Participation Act to avoid future litigation.
Nonetheless, the CSeries – behind schedule, about US$2 billion over budget and with fewer-than-expected buyers – is the primary reason for Bombardier’s request for financial aid from the federal government. “We have been clear that such an important decision will only be made after due diligence, careful consideration and a strong business case”.
Montreal-based Bombardier now has 678 total orders and commitments for the CSeries, including 243 firm orders.
Air Canada CEO Calin Rovinescu said its deal with Quebec ensures the “status quo” in which such work is done overseas as well as in Trois-Rivieres, and Mirabel, Que., along with at other parts of Canada.
By Wednesday closing, Bombardier Inc. climbed 15.24 percent to 1.21 Canadian dollars per share, but Air Canada declined 12.13 percent to 7.39 Canadian dollars per share after the airlines reported a widening net loss and said its costs would fall this year if the Canadian dollar remains unchanged for 2015 levels. Intense competition from Boeing Co. and Airbus Group SE has kept Bombardier’s sales lower than analysts anticipated for the quarter and the company has forecast lower-than-expected revenue for 2016.
Although the program is about two years behind schedule and at least $2 billion over budget, Bellemare says he expects the company will become cash-flow positive by 2018, while the CSeries program should break even by 2020.
Bombardier also announced plans to consolidate its shares, which have sold off heavily on the TSX since the start of 2015 as CSeries delays began to mount.
Bombardier’s stock fell below the $1 mark on the Toronto Stock Exchange for the first time in 25 years closing at 90 cent last month.
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The ratio for the reverse stock split will be decided later, but is targeted to result in an initial post-consolidation share price of C$10-C$20 per class A share or class B subordinate voting share, the company said.
