Air Canada’s loss widens; to buy 75 aircraft from Bombardier

The order from Air Canada also includes an option on an additional 30 of the CS300 jets, along with conversion rights to the CS100. “We’ve been carefully assessing the capabilities of Bombardier’s C Series aircraft and its progress for some time”, said Air Canada CEO Calin Rovinescu.

The workforce reduction will allow the Canadian aircraft and train manufacturer to resize its organization in line with its current business need and to boost its competitiveness.

Last year, the Quebec government offered the beleaguered company a $1-billion bailout in exchange for half of a new subsidiary that will own the C Series jets.

Bombardier, one of the world’s largest aerospace companies, said Wednesday that it will lay off 7,000 of its 64,000 global workforce.

“There is no way that the federal government should not invest in Bombardier and the C-Series”, says Couillard. While this is certainly devastating for the employees involved, it does show that Bombardier is serious about tackling a bloated cost structure.

“Air Canada’s commitment is a strong endorsement of this outstanding aircraft”, Bombardier president and chief executive Alain Bellemare said in a statement. The company has roughly US$6 billion of net debt on its balance sheet (not including any pension liabilities), which is far too high a number for a company of this size.

Transport Minister Marc Garneau said he was encouraged to hear of the agreement between Bombardier and Air Canada but concerned about those losing their jobs.

Bombardier says it’s the biggest manufacturing company of Northern Ireland.

Andrew Pyle, a fund manager at ScotiaMcLeod Inc.in Peterborough, Ontario said Bombardier is still facing an uphill battle to win over investors.

Prof. Tyler Adam Chamberlin of the University of Ottawa’s Telfer School of Management says more government cash for Bombardier is essential because the country doesn’t have many firms like it.

Looking ahead, Bombardier forecast more declines in revenue, to as low as $16.5 billion in 2016. Even with the rally Wednesday, the stock is down 57 percent over the past 12 months. Bombardier’s Class B stock closed below C$1 for 13 consecutive sessions through Tuesday. “The C Series will bring light and goodness, but it will take a year or two as they ramp up production and learn how to make them effectively”.

Federal Industry Minister Navdeep Bains and senior officials in the Prime Minister’s Office were informed in late November that Air Canada and Bombardier were in talks.

Since Bellemare’s arrival at the helm, Bombardier has focused sales efforts on adding established airlines to a C Series order book dominated by lessors and small carriers.

These job losses would target “and other production employees, including 2,000 contractual” in 2016 and 2017, the company said at the publication of its financial results for the fourth quarter 2015. The new CS300 competes directly with the 737-7 from Boeing Co.

Although there are now commitments from buyers for a total of 678 aircraft, there are just firm orders for 243.