Bombardier delays C-Series flight, cuts train unit jobs
(Reuters) - Canada's Bombardier Inc (BBDb.TO) said it would delay by about six months the first flight of its C-Series jetliner because of issues related to suppliers, and that it would cut about 1,200 jobs in its train manufacturing division.
Bombardier, which also reported a 6 percent drop in third-quarter revenue -- mainly due to the train division and a stronger dollar -- said it would close a freight car plant in Aachen, Germany as part of the cutbacks in the business.
The Montreal-based company, the world's biggest train maker and No. 3 aircraft maker, said it would take a restructuring charge of up to $150 million in the current quarter.
Bombardier said it had agreed with suppliers to push back the first flight of the C-Series until the end of June 2013. The first flight had originally been planned for the end of 2012.
The company said deliveries of the 110-seat CS100 aircraft were expected to start about one year after the first flight.
It said on Wednesday it still expected the 130-seat CS300 to enter service at the end of 2014.
The delay of the inaugural flight had been widely expected because of the project's complexity and what analysts consider to be an extremely ambitious schedule.
Bombardier, which is investing $3.3 billion to develop the C-Series jets, said in August it would consider itself on schedule if it was within three to five months of its first-flight target.
Many analysts have said that a six-month extension would not be worrisome, but a longer delay would be cause for concern.
"The important thing in the C-Series program is that although there is some moving around of the first flight, the entry into the service through the CS300 remains toward the end of 2014," said Chris Murray of PI Financial.
Bombardier, which currently competes with Brazilian planemaker Embraer SA (EMBR3.SA) in the smaller regional jet market, will take on Airbus EAD.PA and Boeing Co (BA.N) with the C-Series, its biggest aircraft yet.
The plane would challenge the top-selling, single-aisle Boeing and Airbus planes in the 737 and A320 families.
Bombardier said it would cut more than 3 percent of its train unit workforce of about 36,000. The company has about 70,000 employees, including about 400 at the Aachen plant.
Third-quarter revenue in the transportation division, which houses the train operations, fell 9 percent to $2.1 billion as contracts in Europe and other regions wrapped up while orders received in the last few quarters were still in the start-up phase.
The timing of contracts also affected revenue and earnings in the second quarter.
A stronger dollar reduced third-quarter revenue by $160 million in the transportation division, Bombardier said.
Net profit rose to $212 million, or 12 cents per share, from $192 million, or 11 cents per share, a year earlier, topping the average analyst forecast of 10 cents per share, according to Thomson Reuters I/B/E/S.
Revenue fell 6 percent to $4.34 billion. Analysts were expecting $4.66 billion.
Revenue in the aerospace division was flat at $2.3 billion.
Free cash flow usage fell to $237 million, from $346 million a year earlier.
Shares of Bombardier, which has a market value of C$6.25 billion ($6.28 billion), closed at C$3.61 on the Toronto Stock Exchange on Tuesday. They have fallen more than 12 percent so far this year.
($1 = 0.9949 Canadian dollars)
(Reporting by Susan Taylor in Toronto and Bhaswati Mukhopadhyay in Bangalore; Editing by Sreejiraj Eluvangal, Saumyadeb Chakrabarty and Ted Kerr)