Bombardier management shakeup sees Beaudoin leave as chair
New CEO hired, Pierre Beaudoin becomes executive chairman
Bombardier Inc., the world's third-largest maker of civilian commercial aircraft, announced major changes in its top ranks Thursday as it deals with problems in its aerospace division.
Longtime chairman Laurent Beaudoin, a member of the family that has controlled the company since it was founded, will be replaced by his son Pierre Beaudoin, who has been chief executive officer.
The Montreal-based plane and train maker's new CEO will be Alain Bellemare, effective Friday, which is also the date set for Laurent Beaudoin to step aside as chairman.
Bellemare the third non-family CEO in Bombardier's history, has 18 years experience at United Technologies Corp., including at the Pratt and Whitney division that makes jet engines for Bombardier. Bellemare said they must improve profitability.
Company executives also revealed during a conference call Thursday that its C-Series single-aisle airliner program cost has soared to $5.4 billion US, up from $4.23 billion US a year ago.
Bombardier last month wrote down value of its Learjet 85 program, resulting in a pretax charge of about $1.4 billion. Bombardier said it would suspend work on the new model of Learjet in order to preserve cash for other parts of the business.
A number of analysts said after the January announcement that investors had lost confidence in Bombardier's management, sending the company's B widely traded shares plunging to a multi-year low of $2.53 Canadian on Jan. 20.
Shares rebounded a bit since but are down on Thursday by more than 10 per cent, or 32 cents Canadian to $2.72 Canadian in early afternoon trading on the Toronto Stock Exchange.
On Thursday, Bombardier announced that it will suspend dividend payments and will seek shareholder permission to issue up to $2.5 billion Canadian or $2 billion US in debt and new shares to bolster its cash reserves.
The company said the plan will be supported by the Bombardier-Beaudoin family. The changes came as the company said it lost $1.59 billion Canadian or 92 cents Canadian per share in its fourth quarter compared with a profit of $97 million Canadian or five cents Canadian per share a year ago. Revenue totalled $5.96 billion Canadian, up from $5.32 billion Canadian in the fourth quarter of 2013.