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Bombardier shifts focus away from commercial aircraft

Though the CRJ programme remains under Bombardier's wing, company executives made clear on 8 November that Bombardier's focus has shifted away from commercial aviation.

"Bombardier is well positioned with our rail, business aircraft and aero-structures business," says chief executive Alain Bellemare during Bombardier's third quarter earnings call. "In the future, this will be where we will deploy our capital to [ensure] strong return on investment."

His comments came as Bombardier announced it intends to shed 5,000 jobs and sell both the Dash 8 programme and the business aircraft training unit.

The company is "sharpening its focus on our biggest growth opportunities", Bellemare says.

Longview Aviation Capital, an affiliate of British Columbia-based Viking Air, has agreed to purchase the Dash 8 programme, including the Q400, for $300 million. Viking Air in 2016 purchased Bombardier's CL line of water bombers.

"We believe that there's a better owner than us to keep this programme going," says Bellemare of the Q400.

The announcement follows news earlier this year that Bombardier sold the Toronto Downsview site where it assembles the Q400. Bombardier has enjoyed some recent Q400 sales success, but outstanding orders still stand at only 62, according to FlightGlobal's Fleets Analyzer database.

Longview calls the Dash 8 a "perfect complement" to its portfolio, saying it will "continue to independently operate" the Q400 programme at Downsview until at least 2021.

Bombardier also reached a deal to sell its business aircraft training business to Quebec-based pilot training company CAE for $800 million.

Both agreements require regulatory approval and will likely close in the second half of 2019, Bombardier says.

Bellemare insists Bombardier remains committed to CRJs. But, he concedes the programme has been losing money and says Bombardier is keeping options open.

"We will also continue to actively participate in the regional aircraft market," he says. "In terms of exploring strategic options – it something that is always on the table."

"We are losing money on the CRJs. We need to see more movements [from] the suppliers in terms of reducing cost," he adds. "Our focus is on reducing cost and increasing volumes."

Bombardier holds only 54 outstanding orders for CRJs, according to FlightGlobal's Fleets Analyzer database.

The 5,000 job cuts will come within 12 to 18 months, and the company will transfer aerospace engineers to other units, with most going to the business aircraft division, Bellemare says.

Those efforts are part of a plan to save $250 million annually by 2021.

Bombardier reported a third quarter net profit of $149 million, reversing a $100 million net loss in the same period last year.

The commercial aircraft unit earned a $4 million profit before interest and taxes, but revenue declined by half to $256 million, largely reflecting the CSeries divestment.

Bombardier delivered five commercial aircraft in the quarter and expects to deliver 35 for the full year, says chief financial officer John Di Bert.

The company's business aircraft unit posted a profit of $80 million, down 8% year-over-year, while revenue inched up 1% to $1.1 billion.

Bombardier handed over 31 aircraft in the quarter and remains on track to deliver 135 business aircraft in 2018, including the first Global 7500, expected for December delivery, Di Bert says.

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