(The Canadian Press circulated the following article by Karine Fortin on May 30.
MONTREAL — The head of Bombardier Inc. has called on the federal government and the central bank to put the brakes on the ascending loonie or risk losing jobs to offshore production.
“If the Canadian dollar continues to gain ground, manufacturing companies that export will have almost no other choice but to increase the U.S. content of their business or move production to countries where costs will allow them to be more competitive,” Laurent Beaudoin said Tuesday.
Beaudoin also told the annual meeting of shareholders that the Bank of Canada should step in to regulate the Canadian dollar.
“While I understand the Bank of Canada’s role is to control inflation by varying interest rates, I have a hard time understanding why it only steps in when there is a loss of confidence in the Canadian dollar, and not in the opposite case when there is excess confidence that leads to an overly rapid appreciation of our currency.”
Beaudoin echoed a call already made by the CEO of newsprint giant Abitibi-Consolidated Inc. (TSX:A).
Abitibi’s John Weaver recently called for the Canadian government to stabilize the high-flying loonie, which he said has battered forestry companies.
Weaver told his annual shareholders’ meeting earlier this month that Canada’s monetary policy should take into account currency fluctuations.
Son Pierre Beaudoin, head of Bombardier’s aerospace division, noted the company has been hurt less by the soaring loonie than other companies because a good chunk of its production and sales are outside Canada.
But the stronger loonie has cost Bombardier about $500 million in the last three years, Pierre Beaudoin told the annual meeting.
In its first-quarter results, Bombardier said its profit declined to $24 million US from a year-earlier $55 million US on restructuring costs and lower revenue.
Net income for the quarter ended April 30 amounted to one cent per diluted share, down from three cents per share a year ago, the global manufacturer of aircraft and railway cars reported.
Shares in Bombardier (TSX:BBD.SV.B) fell 61 cents, about 15 per cent, to close at $3.36 in trading on the Toronto Stock Exchange.
The firm, which reports in U.S. dollars, said total revenue dropped to $3.5 billion from $3.8 billion US.
Analysts surveyed by Thomson Financial had looked, on average, for earnings of three cents per share, before one-time items.
Laurent Beaudoin told a conference call to discuss the first-quarter results that regional aircraft will help turn around his company and mainline airlines.
“We still firmly believe that regional aircraft are part of the airline’s restructuring solution and that mainline carriers will continue to rely on regional airlines to help them compete with low-cost carriers,” he told analysts.
“The business jet market remains strong,” he said.
He added that Bombardier wants to continue to reduce its debt to “reinforce the balance sheet.”
Bombardier reported special items amounting to a charge of $24 million, versus a gain of $8 million in the year-earlier period. The items were related to final charges in the restructuring of its transportation division.
Excluding the charges, the company said its after-tax income from continuing operations was $43 million, or two cents per share, compared with $28 million, or a penny a share.
Aerospace revenue rose slightly to $1.94 billion while transportation revenue dipped to $1.59 billion from $1.82 billion.
Beaudoin also said the regional aircraft team continues to explore new opportunities in the 80-to 100-seat market.
Bombardier’s aerospace division makes regional aircraft and business jets, while its transportation division makes railway equipment.