Bombardier to lay of 1,600 staff – focus now on Challenger and Global jets

©Bombardier

Bombardier is to continue its transition from plane and trainmaker to solely a business jet manufacturer as it looks to lay off 1,600 of its staff. The majority, 800, will be mostly those based in Quebec, though some 250 in Wichita are also likely to go as operations on the poorly performing Learjet are to be closed down.

Spurred on by the consequences of the COVID-19 pandemic and its effect on the aerospace industry, the move comes as the company looks to generate US$400 million in recurrent savings by 2023. Pre-pandemic, Bombardier had anticipated breaking even on free cash flow in 2020; this has now been altered to between 2021 and 2023. This year the company anticipates business jet deliveries will be in line with 2020, showing modest revenue growth, and with an adjusted EBITDA in excess of US$500 million, as it closes down production of its Learjet later in the year in order to focus on the more profitable Challenger and Global business jet models.

According to Refinitiv IBES data, analysts have estimated an average 2021 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of US$661.3 million. Bombardier reported a 19.7% fall in business jet deliveries to 114 in 2020, in line with industry trends. However, 2020 revenues from corporate aircraft activities increased by 3%, assisted by year-end deliveries of Global 7500 jets and a bounce back in demand. The company reported 2020 free cash-flow usage from continuing operations of US$1.9 billion, while it expects to reduce cash burn in 2021 to better than US$500 million. The company said it now has pro forma cash and cash equivalents of about US$5.4 billion, including proceeds from the sale of its transportation unit, and a pro forma net debt of about US$4.7 billion. Bombardier reported an adjusted loss before interest and taxes of US$165 million for the quarter ended Dec. 31, as opposed to a profit of US$168 million the previous year.

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