This morning, Bombardier announced the sale of non-core assets and the monetization of royalties, in a bid to streamline cost operations and enhance overall productivity.
The company entered into definitive agreements for the sale of the Q Series aircraft program and de Havilland trademark to a wholly owned subsidiary of Longview Aviation Capital Corp. for approximately $300 million; and the sale of Business Aircraft’s flight and technical training activities to CAE and the monetization of royalties for approximately $800 million.
Both transactions are expected to close by the second half of 2019, following the usual regulatory approvals. Net proceeds from the transactions are expected to be approximately $900 million after the assumption of certain liabilities, fees and closing adjustments.
2,500+ jobs cut in Montreal
Bombardier has launched a company-wide restructuring initiative focused on optimizing production and management processes, flattening management structures and further reducing indirect costs.
“With our heavy investment cycle now completed, we continue to make solid progress executing our turnaround plan,” said Alain Bellemare, president and CEO, Bombardier Inc. “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.”
Collectively, these actions will result in a reduction of approximately 5,000 positions across the organization over the next 12 to 18 months, leading to annualized savings of approximately $250 million at full run rate, which the company expects by 2021. Bombardier anticipates recording a restructuring charge in 2019 of approximately the same amount as special items.
According to the CBC, a spokesperson for Bombardier said 2,500 jobs will be cut in Quebec, where approximately 20,000 individuals are employed with Bombardier.