(The Ottawa Business Journal posted the following story on its website on May 27.)
MONTREAL — Montreal-based transportation giant Bombardier Inc. skidded into the red ink in its first quarter results reported Thursday due to problems at its rail operations.
The company reported a net loss for the quarter of $174 million, or 10 cents a share, compared with net income of $54 million, or three cents, in the same period a year ago (all figures in U.S. dollars).
Contributing to the loss was a charge of $86 million related to a restructuring of the company’s rail division, Bombardier Transportation.
Bombardier is the world’s largest train maker and the third-largest civil aircraft manufacturer.
Revenues during the quarter rose to $3.5 billion from $3.3 billion.
“At Bombardier Transportation, results were affected by contract adjustments in specific areas of the business, mainly in the total transit systems division, in connection with new technical issues and cost overruns, which led to the deterioration of contract margins during the quarter,” Bombardier president and CEO Paul Tellier said in a statement.
Tellier added that he is confident that the restructuring plan unveiled in March will soon return Bombardier Transportation to profitability.
In March, Tellier unveiled a three-year, $777-million restructuring program that included 6,600 layoffs, or about 20 per cent of the rail division’s workforce, and the closing of seven plants in Europe.
In 2003, Bombardier cut about 11 per cent of its aerospace employees in response to slumping jet sales. It also sold off its recreational products division, home to the legendary snowmobiles upon which the company was founded.
In the aerospace division, revenue rose by nine per cent during the quarter as the global aviation market improved. However, Tellier added that improved margins in the business aircraft segment were offset by increased regional jet sales incentive costs.
The company expects to deliver roughly the same number of jets in this fiscal year as last year.