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Bombardier Pins Hopes On New CEO

by Mike Godfrey,, Washington

25 February 2015

With the release of its year-end accounts, Bombardier has announced the appointment of Alain Bellemare as its new Chief Executive Officer (CEO) and has released a three-point financial plan.

Bellemare takes over as CEO from Pierre Beaudoin, who has been appointed Executive Chairman. Laurent Beaudoin will retire from his position as Chairman of the Board of Directors after more than 50 years. He will remain on the Board with the honorary title of Chairman Emeritus.

The change in leadership comes as analysts warn that Bombardier, the world's largest manufacturer of planes and trains, is facing a financial crisis. Despite announcing record revenues of USD20.1bn for the year (up from USD18.2bn for 2013) and USD6bn for the quarter (up from USD5.3bn for the same period in 2013), Bombardier's share price has dropped by about 70 percent and the company faces ongoing product delays.

Bombardier has responded by announcing a new three-point plan to help strengthen its financial profile, including proposals to:

  • Access the capital markets for approximately USD600m in new equity;
  • Access the capital markets for up to USD1.5bn in new debt capital; and
  • Explore other initiatives, such as consolidating certain activities.

In order to realize this plan, the corporation has filed a preliminary prospectus with the Canadian securities regulatory authorities, which will allow it to offer approximately USD2bn of debt, equity, and other securities over a 25-month period. It has also suspended dividend payments.

Since last January, Bombardier has raised cash by selling off its Flexjet fractional business jet service and, more recently, a military training and simulation unit. Last August, Bombardier also dissolved its aerospace division and created three standalone units for commercial aircraft, business jets, and aerostructures and engineering services.

The new financing plan also follows Bombardier's costly decision to put on hold production of the Learjet 85 in January. In addition, Bombardier has completed about 1,000 flight hours on the CSeries test program – just 40 percent of the 2,400 hours that it had planned when it launched flight testing in September 2013.

Bombardier's new CEO, Bellemare, said: "This is a new beginning, both for myself and for Bombardier. We must improve profitability and realize the true potential of this great organization. I am thrilled to take on these new responsibilities and to join forces with Pierre Beaudoin and the rest of the senior management team. I'm sure that together we will deliver profitable growth."

TAGS: aviation | Aerospace

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