Bombardier announces streamlining measures and earnings growth

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Bombardier’s results for the third quarter of 2018 show earnings growth of 48% year over year to US$271m on US$3.6bn revenues. Full-year revenue is expected to be approximately US$16.5bn. The Business Aircraft segment’s revenue for the quarter totaled US$1.1bn, with 31 deliveries made.

The company also announced an enterprise-wide productivity program, which is expected to save the company US$250m a year at full run rate, by 2021. In addition, Bombardier has made agreements to sell non-core assets and monetize royalties – to generate approximately US$900m net. The non-core assets being sold include the Q Series program and Business Aircraft’s flight and technical training activities –both transactions should close by the second half of 2019.

The company is approaching the final phase of its turnaround plan, and with the recent certification of the Global 7500, has completed its heavy investment cycle.

“With our heavy investment cycle now completed, we continue to make solid progress executing our turnaround plan,” said Alain Bellemare, president and CEO, Bombardier. “With today’s announcements we have set in motion the next round of actions necessary to unleash the full potential of the Bombardier portfolio.

“During the earnings and cash flow building phase of our turnaround, we will continue to be proactive in focusing and streamlining the organization, and disciplined in the allocation of capital. I am very proud of what we have accomplished, and very excited about our future.”

Bombardier’s new enterprise-wide productivity program is intended to streamline and simplify the company. The initiative includes two actions. First, with the heavy aerospace investment phase completed, Bombardier will ‘right-size’ and redeploy its central aerospace engineering team. Key engineering team members will be redeployed, with the largest group moving to Business Aircraft, to support future development programs.

Bombardier will also establish a new Advanced Technologies Office (ATO), which will be led by François Caza, who has been appointed chief technology officer. The ATO will focus on systems design and engineering, including applying experience from Bombardier’s aerospace programs to its rail transportation business.

Bombardier has also launched a company-wide restructuring initiative focused on optimizing production and management processes, flattening management structures and further reducing indirect costs.

Collectively, these actions will result in a reduction of approximately 5,000 positions across the organization over the next 12-18 months, leading to annualized savings of approximately US$250m at full run rate, expected by 2021.

For the 2019 fiscal year, revenues are targeted to grow by approximately 10% to US$18bn or more, as deliveries of the Global 7500 accelerate. Profitability is anticipated to grow at a faster pace, with EBIT before special items targeted to grow by approximately 20% to a range of US$1.15bn to US$1.25bn, and EBITDA before special items anticipated to increase by approximately 30% to a range of US$1.65bn to US$1.8bn.

Bombardier is also reaffirming its 2020 financial targets, even after the divestiture of the Q Series program and Business Aircraft’s flight and technical training activities.

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Izzy has been part of the Business Jet Interiors International team since its second issue, and the editor since 2011. She also edits Auditoria, Railway Interiors International and Winter Sports Technology International. Outside of work, Izzy is rediscovering her love of art by learning how to paint with watercolors.

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