Bombardier installs new CEO, suspends dividend
Former UTC exec, Alain Bellemare, to assume helm of beleaguered aerospace firm.0
MONTREAL — Bombardier Inc. is making major changes in its top ranks as it deals with problems in its aerospace division, including the soaring cost of the new generation CSeries passenger jet — the company’s flagship project.
Longtime chairman Laurent Beaudoin — a member of the family who has controlled the company since it was founded — will be replaced by his son Pierre Beaudoin, who has been chief executive since mid-2008.
The company’s new CEO will be Alain Bellemare, effective Friday, which is also the date set for Laurent Beaudoin to step aside as chairman of Bombardier’s board.
The elder Beaudoin is in his mid-70s and the younger Beaudoin, who has risen through the ranks, is in his early 50s.
Bellemare, the third non-family CEO in Bombardier’s history, has 18 years experience at United Technologies Corp., including at the Pratt and Whitney division that makes jet engines for Bombardier and other customers.
“We must improve profitability and realize the true potential of this great organization,” Bellemare said in a statement.
“I am thrilled to take on these new responsibilities and to join forces with Pierre Beaudoin and the rest of the senior management team.”
The changes came as the company said it lost $1.59 billion or 92 cents per share in its fourth quarter compared with a profit of $97 million or five cents per share a year ago. Revenue totalled $5.96 billion, up from $5.32 billion in the fourth quarter of 2013.
The loss for the quarter included a $1.4-billion charge related to a pause of its Learjet 85 program announced last month.
Bombardier said it would suspend work on the new model of Learjet in order to preserve cash for other parts of the business.
Company executives also revealed during a conference call Thursday that the CSeries program cost has soared to US$5.4 billion, up from US$4.23 billion a year ago.
A number of analysts said after the January announcement that investors had lost confidence in Bombardier’s management, sending the company’s widely traded B shares plunging to a multi-year low of $2.53 on Jan. 20. The shares had recovered some lost ground since then, closing at $3.04 at Wednesday’s close before the shakeup was announced.
Bombardier was most actively traded issue on the Toronto Stock Exchange, with more than 12 million shares traded within the first 30 minutes of trade. The shares were down 45 cents or 14 per cent from the previous close, at $2.59.
On Thursday, Bombardier announced that it will suspend dividend payments and will seek shareholder permission to issue up to C$2.5 billion in debt and new shares to bolster its cash reserves.
The company says the plan will be supported by the Bombardier-Beaudoin family — which has been led by Laurent Beaudoin for more than 50 years.
The company was founded by Pierre Beaudoin’s grandfather, a Quebec inventor best known for the Ski-Doo snowmobiles.
© 2015 The Canadian Press