Bombardier Inc said on Thursday it would sell two businesses for around $900 million and cut 5,000 jobs and as it expands its stronger corporate jet and rail divisions, but the company's shares fell as much as 26 percent on a disappointing free cash flow forecast.
The Wichita site - which assembles Learjets, performs flight testing of all the company's aircraft and also repairs and maintains Bombardier's full line of business jets - employs about 1,600 people.
The Montreal-based firm has also agreed to sell its Q Series turbo-prop airliner programme along with the de Havilland trademark to fellow Canadian aircraft manufacturer Viking Air for $300 million.
Net proceeds from the transactions are expected to be approximately 900 million Canadian dollars after the assumption of certain liabilities, fees, and closing adjustments. The overall restructuring is expected to take place over the next year and a half and will save the company US$250 million per year.
Bombardier previously announced about 14,500 cuts around the world in the aerospace and railway divisions.
Net profit of US$149 million compared with a net loss of US$100 million previous year when the company was making heavy investments in various segments including planes.
About 2,500 Bombardier workers will be laid off in Quebec and 500 in Ontario while about 2,000 cuts will be overseas.
"With our heavy investment cycle now completed, we continue to make solid progress executing our turnaround plan", said CEO Alain Bellemare. In a conference call with investors this morning, John Di Bert, the chief financial officer of Bombardier said that the announced actions were created to show that the company's focus was on efforts to grow earning and cashflows saying: "We continue taking concrete actions to reshape Bombardier's portfolio".
"This is very bad news, it sends a worrisome message about the future of the industry", Renaud Gagne, head of the Unifor labour union's Quebec branch, said in a statement.
The cuts, which are expected to save $250m by 2021, were announced yesterday in the company's third-quarter results. The companies argues that its shift of the C series to Airbus will allow it to focus on regional planes. He says Longview intends to maintain existing supply chains for the Q400 and Dash 8 series that stretch from China to Ireland.
"The Dash 8 turbo-prop is the flawless complement to our existing portfolio of specialized aircraft including the Twin Otter and the Canadair CL 215 and 415 series of water bombers", Longview Aviation chief executive David Curtis said in a statement.