OTTAWA — Faced with an “unpredictable economic environment,” transportation giant Bombardier Inc. said Friday it will slash its aerospace work force by 6 per cent and cut assets under management at its financing arm by $5-billion, the Globe and Mail reported.
The changes are aimed at reducing Bombardier’s debt and increasing its “financial flexibility” in the face of what it called continuing economic uncertainties.
The job cuts will mean the reduction of 1,980 positions across all levels of employees. It will affect all Bombardier Aerospace production sites in Canada, the United States and Britain. About 20 per cent of the jobs lost will be at the management level.
In Canada, 915 jobs will be lost in Montreal and another 365 in Toronto. Outside this country, a total of 260 positions will be cut at Bombardier facilities in Tucson, Ariz. and Wichita, Kan. while 240 will be cut in Belfast and another 200 will be eliminated in other locations.
The job cuts a slated to begin in October.
Temporary cutbacks
As well, the Montreal-based transportation giant also said there would be temporary cutbacks at its aerospace facilities.
In Toronto, all manufacturing work will be interrupted for six to eight weeks, beginning in November. A total of 1,600 workers will be affected.
At Bombardier’s Montreal operations, production of the Challenger 604 business jet will be reduced over a four-month period.
Further production cuts are slated for plants in Wichita and Belfast, Bombardier said.
As well, Friday’s plan will also see Bombardier reduce assets under management at its Bombardier Capital unit by $5-billion, mostly through the sale and wind-down of portfolios related to its manufacturing business as well as the business aircraft financing portfolios.
Bombardier Capital will concentrate on inventory finance, railcar leasing and interim financing for Bombardier Aerospace regional aircraft.
Proceeds from the sale and gradual wind-down will be applied to the reduction of Bombardier Capital’s debt.
The sale and writedown will be spread over several months, the company said.
“The measures we have put in place today, once they are carried out, will enhance Bombardier’s financial flexibility in the context of the uncertainties of this unpredictable economic environment,” Bombardier president and chief executive Robert Brown said.
Maintains financial targets
Despite Friday’s move and the future uncertainties outlined, Bombardier maintained its current financial targets “regardless of the gradual sale and wind down of Bombardier Capital portfolios.”
“Maintaining these targets also takes into account the good performance of the transportation and recreational products sectors,” Bombardier said.
A total of 14 analysts polled by Thomson Financial/First Call are expecting earnings of 69 cents a share for the current fiscal year.
Last September, Bombardier — along with global aerospace industry — announced plans to cut 3,800 jobs worldwide amid fallout from the Sept. 11 terrorist attacks.
More recently, the company has been hammered in the markets, hampered by continued uncertainty in the aerospace industry and interrupted service this summer on Amtrak’s Acela high-speed train line. Bombardier was involved in building those trains.
On Thursday, Bombardier’s class B shares closed down 33 cents or 6.6 per cent at $4.64 in Toronto. That compares to the stock’s 52-week high of $17.39 and a low of $3.75.