Bombardier said on Thursday it would halt Learjet aircraft production and slash about 1,600 jobs this year as it becomes a pure-play business jet maker, after reporting an adjusted loss before interest and taxes for the fourth quarter due to Covid-19.
After flagging likely layoffs in November, Montreal-based Bombardier announced further cost-cutting efforts to generate $400 million in recurring savings by 2023 and improve earnings this year while increasing its aftermarket business.
"We view 2021 as a transition year," chief executive Éric Martel told analysts.
The 1,600 job cuts include reductions related to improvements in manufacturing its flagship Global 7500 jet, the company said. Bombardier, which had previously planned to break even on free cash flow in 2020, now expects to turn cash flow-positive between 2021 and 2023.
Bombardier stock dived 11 per cent to C$0.65 ($0.51) per share in morning trade on the Toronto Stock Exchange on Thursday. The company has shed assets in recent years, transforming itself from a plane and train maker to a business jet manufacturer, to restore profitability and cut debt, after facing a cash crunch in 2015.
In 2021, the company expects business jet deliveries “roughly in line with 2020," modest revenue growth, and adjusted earnings of more than $500m, as it winds down production of the low-selling Learjet later in the year to focus on the more profitable Challenger and Global jet models.
Analysts on average estimated 2021 adjusted earnings to be $661.3m, according to Refinitiv data.
Ahead of its March 4 investor day, Bombardier cited cost improvements on the Global 7500 jet and its growing service business as key earnings drivers.
Bombardier reported a 19.7 per cent fall in business jet deliveries to 114 in 2020, in line with industry trends. But 2020 revenues from corporate aircraft activities rose 3 per cent, helped by year-end deliveries of Global 7500 jets and a rebound in demand.
Bombardier reported 2020 free cash-flow usage from continuing operations of $1.9 billion, but expects to reduce cash burn in 2021 to better than $500m.
The company said it now has pro forma cash and cash equivalents of about $5.4bn, including the proceeds from the sale of its transportation unit, and a pro forma net debt of about $4.7bn.
Bombardier reported an adjusted loss before interest and taxes of $165m for the quarter ended December 31, compared with a profit of $168m a year earlier.