Bombardier will cut 5 thousand jobs and sell two units
Canadian corporation Bombardier Inc intends to sell two units for approximately $ 900 million and reduce 5 thousand employees.
Shares of the company fell by 26% due to the disappointing free cash flow forecast.
A Canadian aircraft and train manufacturer reported that it could achieve the target free cash flow in 2018 only using revenues of $ 635 million from the sale of the plant in Toronto. Analysts had expected Bombardier to achieve its goal, even without accounting for these revenues.
Bombardier CFO, John De Burt, explained this by greater than expected working capital needs in the railway division.
Bombardier this year had to invest more than expected in reserves for railway contracts. However, the company will receive the bulk of payments only after these orders have been completed, a Bombardier spokesman told Reuters.
The cuts, which will affect more than 7% of Bombardier employees worldwide, will allow the company to save about $ 250 million annually by 2021.
The company also said it was selling Q400 turboprop aircraft to Longview Aviation Capital for $ 300 million. Bombardier sells its training business to Canadian CAE Inc for $ 645 million.
A Longview statement said that work on the Q400 assembly site in Toronto will continue until at least 2021.
Earlier Bombardier presented a forecast that revenue in 2019 would increase by 10% to $ 18 billion or more, thanks to an increase in the supply of Global 7500 aircraft.