Union foresees no layoffs at Bombardier, for now
(UPDATE: Adds details on Bombardier workforce in paragraph 4)
By Charles Grandmont
MONTREAL, Sept 19 (Reuters) - Aircraft maker Bombardier Inc. (Toronto:BBDa.TO - news) (Toronto:BBDb.TO - news) is bracing for aftershocks from the airline industry crisis, sparked by last week's attacks on the United States, but the company is hoping to avoid job cuts, its biggest union said on Wednesday.
``I talked with the company this morning and, for now, there is no question of layoffs,'' Michel Lauzon, president of local 712 of the International Machinist and Aerospace Workers, told Reuters.
The union represents 8,500 workers at three plants in Canada's province of Quebec where Bombardier, the world's third-largest civil aircraft maker, is based and makes its popular 50- to 90-seat Canadair Regional Jet.
Of its overall workforce of 79,000, Bombardier has 37,000 employees in its aerospace division, 21,000 of whom work in Canada. Bombardier's Shorts subsidiary in Belfast employs another 8,000.
A Bombardier spokeswoman said the company expects to feel some fallout from the airline industry, but it was too early to offer specifics. The airline sector, already suffering in the weak North American economy, quickly plunged to crisis levels after the Sept. 11 attacks on New York and Washington by hijacked airlines.
Analysts are wondering whether the slump, which has prompted tens of thousands of layoffs at U.S. carriers and aircraft makers such as Boeing (NYSE:BA - news), will inevitably lead to a sharp drop in plane orders at Bombardier.
``While Bombardier has over two years of firm regional jet orders, customers will obviously want delivery rescheduling, and weaker airlines may in fact face bankruptcy,'' Steve Laciak, analyst for National Bank Financial, wrote in a research report.
``The only offset for Bombardier we can envision -- not immediately though -- is that if airline traffic declines persist after six months, mainline carriers may choose to substitute smaller jets on some routes because of their better economics,'' he said.
Regional jet operations at Bombardier, which is also the world's largest maker of passenger rail equipment, have been driving the company's profits for the past several years, accounting for about 40 percent of total earnings.
Yet despite racking up two big jet orders worth $3.2 billion this year, Bombardier's class B shares have tumbled some 45 percent since the end of January on concerns about how the global economic slowdown would hurt demand for jets.
Bombardier's class B share rose 88 Canadian cents to C$13.74 in Toronto on Wednesday. The stock has fallen 31 percent since the attacks on the United States, which left almost 6,000 people dead or missing.
National Bank Financial's Laciak thinks Bombardier's bottom line profits could rise 10 percent next year instead of the 22 percent forecast by the company, if corporate jet sales pick up and if governments try to bolster the economy with infrastructure spending on mass transit.
Under Laciak's more conservative outlook, Bombardier profit could remain flat at 90 Canadian cents a share next year.
($1 equals $1.57 Canadian) |
