At the same time as releasing third-quarter 2018 figures, Bombardier, the Canadian plane and train manufacturer, has announced its intention to streamline the business in an attempt to reduce annual expenditure by US$250 million at full run rate through the loss of up to 5,000 jobs by 2021. According to the company, this will be achieved through “a company-wide restructuring initiative focused on optimizing production and management processes, flattening management structures.”
Bombardier will achieve this through the launch of “a new enterprise-wide productivity program to further streamline, lean out and simplify the Company. The initiative includes two actions. First, with the heavy aerospace investment phase successfully completed, Bombardier will right-size and redeploy its central aerospace engineering team. Key engineering team members will be redeployed to the business segments, with the largest group moving to Business Aircraft, to ensure they have all the necessary capabilities for future business jet development programs.”
Bombardier also announced the sale of a number of non-core assets, in line with its strategy of focusing on growth opportunities in its Transportation, Business Aircraft and Aerostructures segments. The Company entered into definitive agreements for the sale of the Q Series aircraft program and de Havilland trademark to a wholly owned subsidiary of Longview Aviation Capital Corp. for approximately US$300 million; and the sale of Business Aircraft’s flight and technical training activities to CAE and the monetization of royalties for approximately US$800 million.
Both transactions are expected to close by the second half of 2019, following the usual regulatory approvals. Net proceeds from the transactions are expected to be approximately US$900 million after the assumption of certain liabilities, fees, and closing adjustments.
A summary of the quarter’s results is as follows: Earnings up 48% year over year to US$271 million on US$3.6 billion revenues. Free cash flow usage improved by US$125 million, 25% year over year.
