Bombardier CEO holds off on a cash request from the government – for now
The company announced last week it will lay off 5,000 workers as part of a five-year plan to rein in costs, and reduce the net long-term debt of US$9 billion.
MONTREAL – The head of Bombardier Inc. said he held off on asking Quebec’s economy minister for cash at a meeting Friday, but told him the regional jet program is nonetheless in need of “additional support.”
“I pointed to the CRJ,” CEO Alain Bellemare said in an interview, but added he wasn’t ready to comment on potential public support for the ailing jet program.
“Right now, I don’t see that, but I don’t want to say something today and then in a month from now, two months from now, it’s different. My goal is to make this program work by working with customers and by working with suppliers. I have no other intentions than that, at this point”
Earlier Friday, Economy and Innovation Minister Pierre Fitzgibbon said his government is open to handing over more cash to the Montreal-based firm if it needs help, particularly with the CRJ line.
“I made sure to (tell) Mr. Bellemare that would there be an opportunity, we would be open for business. This 1/8aerospace 3/8 cluster is of paramount importance for the province of Quebec,” Fitzgibbon told reporters.
Bombardier’s stock has plunged from its July peak of $5.58 to a two-year low of $1.67 on Friday, down 20 per cent on the day.
Bellemare defended the company’s actions and attributed the troubled stock in part to the firm’s massive debt and rising interest rates in the U.S.
“The company is at a much better place than it was in 2015. Much better. Night and day,” he said, citing improved operating margins and solid liquidity.
The transportation company announced last week it will lay off 5,000 workers—half of them in Quebec—as part of Bellemare’s five-year plan to rein in costs, focus on rail and business jets and reduce the net long-term debt of US$9 billion.
Fitzgibbon compared possible support for the CRJ to the C Series, which got a US$1-billion boost from the province in 2015 before the company sold a majority stake to Airbus last July. Quebec retains a 16.24 per cent stake in the program.
Investment in the beleaguered company is “a difficult question to answer without a program, without a plan,” Fitzgibbon added, noting that no partnership is in the works at the moment.
His comments came hours after the head of Quebec’s aerospace union called on the province to intervene.
“Faced with the challenges currently facing Bombardier, more and more Quebeckers are saying, ‘We can no longer stand to see these bandits with ties rob us and who give themselves big wages – close the shop and good riddance,’ “’ David Chartrand said Friday in an open letter from the International Association of Machinists and Aerospace Workers.
“Quebec must encourage companies to be responsible,” he added, demanding swift intervention that extracts commitments from the company around employment levels.
Following the Friday morning meeting at McGill University’s Bronfman Building, Chartrand said he was “happy” Bombardier intends to work with the aerospace industry to find jobs for laid-off workers.
On Thursday, Premier Francois Legault seemed cool to financial assistance for the CRJ series, adding he believed there was little hope for the regional airliner unless it finds an international partner.
Federal and provincial governments have been criticized by some in the past for giving funds to support Bombardier.
The plane-and-train maker said in an email that it is the “anchor” of Quebec’s aerospace industry, which employs about 40,000 people, including 1,000 or CRJ workers in Mirabel, Que.
Quebec’s financial market regulator announced Thursday it is reviewing Bombardier’s executive compensation plan, calling on the company to suspend all related trades, which it agreed to.
Bombardier has said that the plan—announced last August shortly before its share price embarked on a three-month descent of more than 60 per cent—allows senior executives to sell shares in some circumstances as an incentive in performance-based compensation.