Bombardier (TSX: BBD) says it will cut its workforce by 7,000 positions over two years, including 2,000 contractors.
Most of the job losses will be in Canada and Europe and will be partly offset by hiring in certain areas.
The Montreal-based aerospace and rail equipment company says the cuts will begin in the coming weeks and be completed by 2017.
The job cuts were announced along with an Air Canada order for the largest model of Bombardier’s new CSeries jets as well as financial results for Bombardier’s latest quarter and the 2015 financial year as well as an outlook for 2016.
“We are turning Bombardier around to make this great company stronger and more competitive,” said Alain Bellemare, who has been Bombardier’s president and chief executive for about a year.
“And today, with the signing of Air Canada for the leading-edge CS300 aircraft, we add a major international airline customer based in North America to complement our orders in both Europe and Asia.”
Read more about Bombardier’s CSeries
Air Canada (TSX: AC) signed a letter of intent to purchase 45 of Bombardier’s CS300 aircraft with options for an additional 30 planes. Based on the list price of the CS300, Bombardier says a firm order would be worth about $3.8 billion.
Among other things, Bombardier reported that its 2015 revenue was $18.2 billion — down from $20.1 billion in 2014.
Revenue in the fourth quarter ended Dec. 31 was $5 billion, down from just under $6 billion a year earlier.
Once a firm purchase agreement is in place, Bombardier says Air Canada will become the first mainline, international North America-based carrier for the CSeries family of aircraft. Deliveries are scheduled to begin in 2019.
With this agreement, Bombardier says it now has orders and commitments for a total of 678 CSeries planes.
MONTREAL, Feb. 17, 2016 /CNW Telbec/ – Air Canada today announced that it has entered into a Letter of Intent (LOI) with Bombardier Inc. for the acquisition of up to 75 Bombardier CS300 aircraft powered by Pratt & Whitney PurePower® PW1500G engines as part of its narrowbody fleet renewal plan. The LOI contemplates 45 firm orders plus options to purchase up to an additional 30 aircraft and includes substitution rights to CS100 aircraft in certain circumstances.
Deliveries are scheduled to begin in late 2019 and extend to 2022. The first 25 aircraft on delivery will replace Air Canada’s existing mainline fleet of Embraer E190 aircraft, with the incremental aircraft supporting Air Canada’s hub and network growth, creating one of the world’s youngest, most fuel efficient airline fleets.
The C Series purchase is subject to completion of final documentation and satisfaction of certain other closing conditions precedent.
“We are delighted to announce this important agreement with Bombardier for the purchase of CS300 aircraft as part of the ongoing modernization of Air Canada’s narrowbody fleet,” said Calin Rovinescu, President and CEO of Air Canada. “With its high fuel efficiency performance and greater seating capacity, the next generation technology of the C Series is very well suited for our current and future network strategy and will be an extremely efficient addition to our fleet. The renewal of our North American narrowbody fleet with more capable and efficient aircraft is a key element of our ongoing cost transformation program – plus the enhanced passenger cabin comfort provided by the CS300 will help us to retain Air Canada’s competitive position as the only Four-Star international network carrier in North America.
“The entry of the C Series into our fleet is expected to yield significant cost savings. We have estimated that the projected fuel burn and maintenance cost savings (on a per seat basis) of greater than 15 per cent should generate an estimated CASM reduction of approximately 10 per cent, when compared to the aircraft it will replace.
“Air Canada has a long history of collaboration with Bombardier. Air Canada Express regional partners operate one of the largest fleets of Bombardier aircraft in the world with a mix of over 135 regional jets and turboprop aircraft by December 31, 2016.
“We were one of the launch customers for the Canadair Regional Jet and today’s announcement reflects our continued support for Canada’s aerospace industry and for the new technologies the industry may develop. We fully expect the new technology of the C Series to efficiently meet the demanding needs of our current and future network strategy,” concluded Mr. Rovinescu.
The acquisition of the C Series aircraft represents a key element of Air Canada’s narrowbody fleet renewal program and complements the acquisition of 61 Boeing 737 MAX aircraft announced in December 2013 to replace the larger end of the airline’s mainline narrowbody fleet. The Boeing agreement provides for Boeing to purchase up to 20 of the 45 Embraer E190 aircraft in Air Canada’s fleet and the first 25 C Series will replace the remaining E190s. Boeing 737 MAX deliveries are scheduled to begin in late 2017 and extend to 2021, while the C Series deliveries are scheduled to start in late 2019 and extend to 2022.
About Bombardier C Series aircraft
According to Bombardier, the C Series family of aircraft, representing the fusion of performance and technology, is a 100 per cent all-new design. By focusing on the 100- to 150-seat market segment, Bombardier has designed the C Series aircraft to deliver unparalleled economic advantage to operators and to open up new opportunities for single-aisle aircraft operations. By employing advanced materials, state-of-the-art technologies and advanced aerodynamics, combined with the groundbreaking Pratt & Whitney PurePower® PW1500G engine, the C Series aircraft is delivering a greater-than 10 per cent unit cost advantage compared to similarly-sized, re-engined aircraft. In addition to delivering best-in-class economics with the C Series aircraft, Bombardier has placed considerable emphasis on cabin design to ensure a superior passenger experience. The aircraft offers 19-inch-wide seats that set a new industry standard, large overhead bins that accommodate a carry-on bag for each passenger, and the largest windows in the single-aisle market. Together these attributes create a widebody feel that offers passengers an unparalleled level of comfort. All noise performance testing on the CS100 aircraft has been completed and data confirms it is the quietest in-production commercial jet in its class. The aircraft’s noise performance and its outstanding short-field capability make it ideal for varied types of operations. The C Series aircraft’s maximum range has also been confirmed to be up to 3,300 NM (6,112 km), some 350 NM (648 km) more than originally targeted.
About Air Canada
Air Canada is Canada’s largest domestic and international airline serving more than 200 airports on six continents. Canada’s flag carrier is among the 20 largest airlines in the world and in 2015 served more than 41 million customers. Air Canada provides scheduled passenger service directly to 63 airports in Canada, 56 in the United States and 86 in Europe, the Middle East, Africa, Asia, Australia, the Caribbean, Mexico, Central America and South America. Air Canada is a founding member of Star Alliance, the world’s most comprehensive air transportation network serving 1,330 airports in 192 countries. Air Canada is the only international network carrier in North America to receive a Four-Star ranking according to independent U.K. research firm Skytrax.
(Reuters) – Air Canada AC.TO said its costs would fall this year if the Canadian dollar remained unchanged from 2015 levels, and announced plans to buy up to 75 CS300 aircraft from Bombardier Inc BBDb.TO as part of a plan to renew its fleet.
A falling Canadian dollar has been weighing on Air Canada because the company makes major purchases such as fuel and planes in dollars.
Canada’s biggest airline said it expects adjusted cost per average seat mile, which excludes fuel expenses, to fall 2-3 percent this year, “if the value of the Canadian dollar were at 2015 levels”.
“The transformative changes we’ve made in recent years provide us with a cost structure, fleet and flexibility to respond, as we did in 2015, to competitive market conditions, fluctuations in the Canadian dollar and to economic weakness,” Air Canada Chief Executive Calin Rovinescu said in a statement.
Airline companies have been benefiting from a 70 percent fall in oil prices since mid-2014. But the fall is also affecting demand for airlines in Canada, where a number of people work in oil and related industries.
Rival WestJet Airlines Ltd WJA.TO earlier this month reported a lower fourth-quarter profit and said its current-quarter revenue per available seat mile, a key measure of profitability, is poised for its steepest decline since 2009. [nL3N15H3W9]
Lower fuel costs helped Air Canada boost its operating margins by 1.5 percentage points in the fourth quarter.
Air Canada said on Wednesday it would purchase 45 of the CS300 aircraft, with an option to buy an additional 30 planes. Deliveries are scheduled to begin in 2019.
The order would be valued at as much as $3.8 billion based on the list price of the aircraft, Bombardier said.
Air Canada’s net loss widened to C$116 million ($84 million), or 41 Canadian per share, in the quarter ended Dec. 31, from C$100 million, or 35 Canadian cents per share, a year earlier. [nCNWfL3mCa]
On an adjusted basis, the company earned 40 Canadian cents per share, matching the average analyst estimate, according to Thomson Reuters I/B/E/S.
Operating revenue rose 2.5 percent to C$3.18 billion.