Thursday, February 12, 2015

Bombardier Announces Executive Shake-up; Posts 4Q, 2014 Losses

By Benét J. Wilson / Published February 12, 2015

Pierre Beaudoin. Image: Courtesy of Bombardier

Pierre Beaudoin. Image: Courtesy of Bombardier

The big news from this morning’s Bombardier earnings call was a major shake-up in its executive ranks. Effective February 13, United Technologies veteran executive Alain Bellemare takes over as President and CEO, while Pierre Beaudoin will become the company’s executive chairman. Current Chairman Laurent Beaudoin will retire after 50 years with the company with the title chairman emeritus.

The moves were seen as part of the Canadian aerospace and transportation company’s effort to address cost overruns in production of the CSeries jet, whose costs have risen by $1 billion to $5.4 billion. The company announced plans to issue $600 million in new equity and up to $1.5 billion in long-term debt, based on market conditions.

EXTRA: Bombardier Commercial Aircraft President Talks CSeries; CRJ Improvements

Bombardier also suspended dividends on Class A and B shares until further notice, and officials said they would look at initiatives to cut debt further, including potential industry consolidation, although executives declined to give further details.

CSeries CS100 FTV4 under assembly. Photo: AirwaysNews

CSeries CS100 FTV4 under assembly. Photo: AirwaysNews

In an update on the troubled Cseries program, Beaudoin expressed confidence that the jet, which competes with Airbus and Boeing in the 100-plus-seat narrowbody category, will hit its goal of certification by the 2015, adding it has met or exceeded expectations.

In August 2014, the company reshuffled its aerospace executive team after Philippe Poutissou, vice president of marketing for the commercial aircraft division, suddenly departed and was replaced by Ross Mitchell, who was named  vice president of business acquisitions. A month earlier, the manufacturer announced it was slashing 1,800 jobs and divided its aerospace division into three units: business aircraft, commercial aircraft and aerostructures and engineering services.

EXTRA: AirwaysNews High Flyer Interview: Bombardier’s Rob Dewar

In an interview with AirwaysNews in November 2014, Rob Dewar, vice president and general manager of the CSeries program said the shake-up gave the company a couple of advantages. “One, a layer of management was removed from the organization, so I report directly to the president now.  We can make faster decisions and have less reporting. We’re able to be more flexible and agile, and that was the key objective of the reorganization.”

Inside the numbers

Bombardier posted a loss of $1.59 billion in the fourth quarter, compared with a $97 million profit during the same quarter in 2013. it blamed most of the loss on the costs incurred when it suspended the Learjet 85 business jet project, forcing the company to take a pre-tax hit of $1.4 billion in the quarter and cut 1,000 jobs. For the year, the company reported a net loss of $1.2 billion, compared with $572 million in 2013.

EXTRA: ANALYSIS: CSeries Flies; Further EIS Delay to 2016 Likely

Bombardier Aerospace’s revenues were to $3.3 billion in the fourth quarter, up 15.8 percent from the $2.9 billion posted in the same quarter last year. For the year, revenues totalled $10.5 billion, compared to $9.4 billion last fiscal year, an increase of 11.9 percent.

Bombardier Aerospace delivered 101 aircraft during the quarter, compared to 83 for the same period last year. The company saw net orders plummet in the quarter, from 252 in 2013 to 67 net orders in 2014. The group delivered 290 aircraft for the year, compared to 238 last fiscal year. The net orders reached 282, compared to 388 last fiscal year. Its backlog reached a level of $36.6 billion as at December 31, 2014, compared to $37.3 billion as at December 31, 2013.

The first four CS100 test aircraft have accumulated 967 flight hours as of  February 10, 2015. On-the-ground testing activities on the fifth test aircraft are ongoing and it is expected to be handed over to the flight test team by the end of the first quarter of 2015.

The first CS300 aircraft has been handed over to the flight test team and is being readied for its first flight which is expected to take place by the end of the first quarter of 2015. The total CSeries firm orders and other agreements reached 563, with 21 customers in 18 countries, including 243 firm orders.

Cover Image: Courtesy of Bombardier

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