KAREN WALKER / WASHINGTON DC
Bombardier is laying off another 3,000 Aerospace Group workers, slicing its profit forecast and warning of a significant write-off charge when it announces its full-year results next month.
The Canadian manufacturer, which cut 3,800 aerospace jobs in September 2001, says the additional cuts will affect its Belfast, Montreal and Toronto facilities and are necessary to align production rates with market demand "in challenging conditions". The new cuts will take the number of employees over the next 12 months to around 31,000.
Bombardier also revealed last week that its profits before special items for the fiscal year 2003 ended 31 January are expected to be half of original estimates. On top of that, the results, to be released on 3 April, will be affected by "significant non-cash write-offs" associated with an accounting policy change for aerospace programmes.
Analyst UBS Warburg believes that charge could be "well in excess of C$1 billion [$671 million]".
It is thought the accounting change charge will be largely related to write-downs for development costs for the Dash 8 Q400 turboprop and the Global Express ultra-long-range business jet.
The company uses a system known as programme accounting which spreads development costs over the estimated life of an aerospace programme, thereby smoothing annual earnings. But where a programme becomes unprofitable because of overly optimistic delivery or sales price estimates, the company would have to record a loss.
Bombardier admits that the accounting change "may change aircraft delivery numbers" for 2003.
Source: Flight International
