(The Globe and Mail posted the following story by Allan Swift on its website on March 31.)
MONTREAL — Investors’ eyes will be focused on the chief executive officer of Bombardier Inc. on Thursday as Paul Tellier discloses the embattled company’s financial results for last year and his “action plan” for the future.
Bombardier’s corporate report for the year ended Jan. 31 will give a good indication of how aircraft sales have progressed — or not — and what moves Mr. Tellier will be taking to shore up investor confidence.
Shares of the Montreal-based company have tumbled like a dot-com flameout, not a manufacturer of aerospace, railway and leisure transportation products with $44.4-billion worth of orders at the end of October.
The stock continued to weaken Friday, falling 7 per cent or 21 cents to close at $2.71, a level last traded at eight years ago.
Mr. Tellier, who took up his Bombardier post in January after being lured from the top spot at Canadian National Railway Co., made his first big move earlier this month by announcing 3,000 employees would be cut at Bombardier Aerospace, the world’s third-largest civil aircraft maker.
Investors — and workers — are bracing for more harsh news on Thursday.
“There could be some shoes to fall,” said analyst Christopher Sears, of MacDougall MacDougall & MacTier. But he declined to speculate what they might be.
“Tellier certainly is one of the most capable CEOs in Canada; he’s going to have to say the right things and answer the questions properly, which I’m sure he will,” he said. “But there are going to be a lot of investors asking questions; they’re pretty skeptical at this point.”
Mr. Sears said he can’t explain why Bombardier stock, which has a 52-week high of $15.24, is in freefall, apart from the global slowdown in the aviation sector, which accounts for about half of Bombardier’s revenue.
“Whether it’s corporate jets or RJs [Regional Jets], they’re getting hit from both sides, and there’s not a lot of letup in sight.
“There are a lot of worries in this kind of market, and investors are voting with their feet.”
Debt rating agencies have dropped Bombardier to their lowest investment grades.
Corporate jet sales, a market Bombardier leads in terms of aircraft offerings, have slumped. There have been no regional jet sale cancellations, although rival Embraer of Brazil announced last week that Swiss International Air Lines halved a regional jet order to 30 aircraft.
Analyst Cameron Doerksen of Dlouhy Merchant Group said this doesn’t necessarily mean there will be order cancellations for Bombardier.
He noted that SkyWest Airlines Inc. — an affiliate of United Airlines Inc., whose parent company UAL Corp. of Chicago has filed for bankruptcy-court protection — has said it plans to take all the Bombardier regional jets it has on order this year.
“To me it was a positive sign. They will still likely have some deferrals but I don’t think we’re going to have large-scale cancellations of orders in North America.”
Mr. Doerksen described Thursday as “a critical day for Bombardier.”
Last Friday, the company revealed it is cutting 350 administrative positions from North American operations of Bombardier Transportation, maker of railway and public transit equipment, such as cars for the New York Subway. The industry-leading transportation division, based mainly in Europe, has continued to do well, winning large train orders.
Bombardier’s fourth-quarter results could include a further writedown or sale of the financing arm, Bombardier Capital, or other assets.