Bombardier to cut jobs, signs with Air Canada for 75 CSeries jets

[February 17, 2016]  (Reuters) - Canadian aircraft and train maker Bombardier Inc said it would slash its workforce by about 7,000 over the next two years, while ramping up hiring to support production of its struggling CSeries commercial jet program.

The company said on Wednesday it had signed a letter of intent with Air Canada  for up to 75 CS300 aircraft for as much as $3.8 billion, based on the list price.

Montreal-based Bombardier now has 678 total orders and commitments for the CSeries, including 243 firm orders.

The company has been struggling to find buyers for the 100-150 seat CSeries jet, in to which it has sunk billions of dollars, due to fierce competition from Boeing Co and Airbus Group SE.

Bombardier's quarterly results missed analysts' expectations, and it also forecast lower-than-expected revenue for 2016.

The company expects to record $250 million-$300 million in restructuring charges in 2016 in connection with the layoffs. The company said it has about 64,000 employees.

The job cuts, mainly affecting the company's aerostructures and engineering services and transportation divisions, will be mostly in Canada and Europe, and are set to start in the coming weeks.

Bombardier said the number of employees directly assigned to the CSeries program is about 3,450 worldwide and is expected to keep growing over the next few years, including new jobs at its plant in Mirabel, Quebec.

The company, which was helped by recent cash infusions from pension fund Caisse de dépôt et placement du Québec and the Quebec government, said it expected free cash flow usage in the range of $1.0 billion-$1.3 billion this year.

Still, Bombardier's stock has declined more than 65 percent over the last 12 months.

The aircraft maker also proposed a reverse stock split on Wednesday, confirming a report by Reuters that said it would consolidate its shares to prop up the sagging stock, which has traded below C$1 since late January, its lowest in 25 years.

The ratio for the reverse stock split will be decided later, but is targeted to result in an initial post-consolidation share price of C$10-C$20 per class A share or class B subordinate voting share, the company said.

Bombardier's net loss narrowed to 31 cents per share in the fourth quarter ended Dec. 31 from 92 cents per share a year earlier.

The company broke even on an adjusted basis, below analysts' average estimate of a profit of 2 cents per share.

(Reporting By Allison Lampert in Montreal and Amrutha Gayathri in Bengaluru; Editing by Shounak Dasgupta)

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