Military

Bombardier Fires 7,000, Takes Order for CS300 Jets

Paul Ausick

Published: February 17, 2016 9:40 am

Last Updated: January 13, 2020 1:06 pm

When aircraft maker Bombardier announced quarterly and full-year results Wednesday morning, the company said it would fire 7,000 employees over the next two years. At the same time, the company said that it has signed a letter of intent with Air Canada for 45 of its new CS300 single-aisle passenger jets. Deliveries of the new plane are currently scheduled to begin in 2019, and the order is valued at $3.8 billion, based on the list price for the plane.

Bombardier has been building regional jets with seating capacity of up to about 100 passengers for years, but the CSeries planes, the CS100 and CS300, are its first planes to address the market for passenger capacities of 100 to 150 seats. The new CS300 competes directly with the 737-7 from Boeing Co. (NYSE: BA) and the A319neo from Airbus.

The order from Air Canada also includes an option on an additional 30 of the CS300 jets, along with conversion rights to the CS100.

Last November, the Province of Quebec invested $1 billion in Bombardier, ratcheting up expectations that either Boeing or Airbus would file a complaint with the World Trade Organization over the government funding. The investment is expected to close sometime this quarter, and Bombardier’s two competitors may be waiting for that to happen before complaining. Bombardier’s rail business also received an investment of $1.5 billion in November from Quebec’s public and private pension fund, Caisse de dépôt et placement du Québec.

Last month United Airlines chose to order 40 new 737-700s from Boeing rather than the CS100. Bombardier’s launch customer for the CS100 is Swiss International Air Lines, and the airplane’s entry into service is set for the second quarter of this year.

The launch customer for the CS300 is Latvia’s airBaltic, and Bombardier has begun production of the first plane that will be delivered to the airline.

Regarding the firing of 7,000 employees, Bombardier said it is adapting its global manpower to current market conditions. The company said it is hiring workers to support its CSeries production ramp and that it is ramping down its rail business to match future demand. Most of the jobs will be lost in Canada and Europe. Bombardier expects to take a restructuring charge of $250 million to $300 million in 2016 related to the firings.

The company’s stock closed up more than 11% Tuesday on the Toronto exchange, at C$0.90 in a 52-week range of C$0.85 to C$4.43. The low was also posted Tuesday.