Thursday, 2 May 2019

Bombardier to quit Belfast as it further cuts-costs

Photo Bombardier Belfast
The Canadian aerospace and transport firm, Bombardier, has confirmed, despite previous efforts, is going to be putting all its Belfast operations up for sale as part of a company-wide reorganisation of the loss-making business.

The company is selling its entire aerostructures operation as it struggles to cut costs and return the group into profitability again. The firm employs around 3600 people across several locations in Northern Ireland and had previously said it was committed to the operation.  

In a statement, Bombardier said the "strategic formation of Bombardier Aviation, consolidating all aerospace assets into a single, streamlined and fully integrated business" was the direction it was going in. The company has sold off many aerospace assets in recent times and is currently looking for sales opportunities for most of the remaining assets. Bombardier Belfast director, Michael Ryan, previously said the Belfast operations would be capable of acting as an outside supplier to Bombardier's business-jets division, that has now effectively been quashed by today's announcement. 

Photo Bombardier Belfast
“We are very excited to announce the strategic formation of Bombardier Aviation,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “It is the right next step in our transformation. The consolidation will simplify and better focus our organisation on our leading brands, Global, Challenger, Learjet and the CRJ. It will also allow us to better support our customers and generate value for shareholders.”

“With our clear vision for the future of Bombardier Aviation, we will focus our aerostructures activities around our core capabilities in Montréal, Mexico and our newly acquired Global 7500 wing operations in Texas,” Bellemare continued. “Collectively, these facilities provide Bombardier with all the skills, technologies and capabilities to design, produce and service the current and next generation of aircraft.”

.The company said it would be working closely with employees and unions, through any future transition period.

The firm also released its latest results, which shows some growth, yet the company is still in some financial with huge debts and pensions deficits.

Some key highlights from Bombardier's business aviation division:
Revenues totalled $970 million on 24 aircraft.
Aftermarket service revenues continued to grow double-digit, at 20% year over year, supported by the strategy to expand footprint and move closer to customers. During the quarter, Business Aircraft announced the expansion of its Singapore Service Centre to further bolster customer service capabilities in the Asia-Pacific region by 2020.
Adjusted EBIT margin of 7.6% reflects the Global 7500 ramp-up and higher aftermarket revenues. The intensification of Global 7500 activities is expected to weigh on earnings before adjusted EBIT margin recovers towards full-year guidance of approximately 7.5%.
Reported EBIT for the quarter of $594 million is largely driven by the $516 million gain on the sale of the Business Aircraft training activities to CAE.
Backlog increased by $0.6 billion, to an industry-leading $14.9 billion, reflecting broad market interest across all regions and customer types.
The Global 7500 has been on a record-setting streak yet isn't expected to breakeven in the next two years.

Commercial Aircraft Highlights

Revenues reached $241 million in the quarter.
EBIT of $22 million reflects the deconsolidation of CSALP, higher proportion of aftermarket revenues and a proactive management of residual value guarantees exposure.
During the quarter, a subsidiary of Chorus Aviation Inc. has finalized a firm purchase agreement for nine CRJ900 aircraft to be operated by Jazz Aviation LP, making them the first Canadian operator of the new ATMOSPHERE cabin.
Commercial Aircraft launched the CRJ550 aircraft. Leveraging current aircraft platform, it is designed to replace the existing fleet of ageing 50-seaters, while maximising revenue potential with a triple-class cabin offering. United Airlines is the launch operator of this new model.
Commercial Aircraft’s expected deliveries for the year are lowered to approximately 30 aircraft as a result of the closing of the Q400 divestiture, which is now expected mid-year. Revenue guidance for the year is correspondingly adjusted to approximately $1.15 billion, with no change to adjusted EBIT guidance at a loss of approximately $125 million.

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