New CEO and chairman at Bombardier as 2014 losses are announced

Bombardier Inc has appointed Alain Bellemare (pictured) as its new president and CEO, replacing Pierre Beaudoin who becomes executive chairman of the Board following the retirement of his father, Laurent Beaudoin, who will remain on the Board with the honorary title of Chairman Emeritus.

News of the appointments was made alongside the release of Bombardier’s financial results for the fourth quarter and the year ended 31 December 2014.

“Laurent Beaudoin is retiring as Chairman after dedicating his entire life to building Bombardier," remarked Pierre Beaudoin. “The Board and I wish to thank Laurent for his passion and his entrepreneurial spirit all through his tenure. Under his guidance, Bombardier became more than an iconic Canadian company, it became a global mobility leader with 74,000 employees and a presence in more than 60 countries across five continents. Our vast product portfolio, largely recognized as the best in the world, is part of his legacy. Bombardier would not be what it is today without his vision and leadership.

“I wish to welcome Alain Bellemare to Bombardier. He is an experienced executive who acquired a deep knowledge of the manufacturing sector while assuming leadership positions in various industries. Throughout his 18-year career at United Technologies Corporation, notably at Pratt & Whitney, he displayed exceptional management skills, with a clear focus on profitability. Most recently, as president and chief executive officer of UTC Propulsion & Aerospace Systems, he oversaw the successful integration of the Goodrich Corporation into the company, and the development of some of the largest programs in UTC’s history, including Pratt & Whitney's PurePower Engine. I am convinced that Alain will bring Bombardier to the next level,” added Pierre Beaudoin.

On the financial side, Bombardier announced fourth quarter (4Q14) revenues of $6.0 billion, compared with $5.3 billion for the same period in the last fiscal year, an increase of 14.6% excluding currency impacts. For the full year 2014, revenues totalled $20.1 billion, an increase of 10.8% excluding currency impacts, compared with $18.2 billion in 2013.

Earnings before financing expense, financing income and income taxes (EBIT) in 4Q14 was negative $1.2 billion, compared with the positive EBIT of $185 million in 4Q13. For the whole of 2014, EBIT was negative $566 million, compared with a positive EBIT of $923 millionin 2013.

EBIT before special items in 4Q14 totalled $156 million compared with 4Q13’s result of $186 million. For the full year, EBIT before special items totalled $923 million, compared with $893 million in fiscal year 2013.

On an adjusted basis, net income in 4Q14 was $83 million, compared with $129 million for 4Q13. For the whole of 2014, on an adjusted basis, net income was $648 million, compared with $608 million in 2013.

"We continue to take action to put in place the right conditions to deliver profitable growth,” commented Pierre Beaudoin. “Thanks to the lighter structure implemented in the Aerospace and Transportation business segments, we will fully benefit from the great potential of our new products.

“We’ve reached significant milestones in our development programmes, such as the assembly of the Global 7000 first Flight Test Vehicle (FTV), which is progressing well. The CSeries flight test programme has logged close to 1,000 flight hours and the performance of the aircraft is meeting or exceeding our expectations. The first FTV for the CS300 aircraft has joined the flight test programme and should accomplish its inaugural flight by the end of the first quarter. On the Transportation side, after completing the mandatory 600,000 km test run, the ZEFIRO 380 very high speed train has been homologated and the first deliveries are expected to occur in the next few weeks. Our total backlog of more than $69 billion gives us great visibility on manufacturing revenues for the next three years.”

Bombardier also announced a new financing plan “to position the Corporation with a flexible and strong financial profile”. The Corporation intends to access the capital markets for approximately $600 million in new equity, depending on market conditions. It also intends to access the capital markets for up to $1.5 billion in new debt capital, again depending on market conditions.

To complement this financing plan, the Corporation will explore other initiatives such as certain business activities’ potential participation in industry consolidation in order to reduce debt.

To realise the capital raising plan, the Corporation has filed a preliminary short form base shelf prospectus with the Canadian securities regulatory authorities which will allow it to offer from time to time over a 25-month period up to approximately $2 billion (C$2.5 billion) of debt, equity or other securities, including convertible securities. The Corporation may also offer the securities on a private placement basis in the US and in other jurisdictions.

Separating Bombardier Aerospace’s 2014 results, revenues amounted to $3.3 billion for 4Q14, compared with $2.9 billion in 4Q13, an increase of 15.8%. For the last full year, revenues totalled $10.5 billion, compared with $9.4 billion in 2013, an increase of 11.9%.

Negative EBIT totalled $1.3 billion in 4Q14, compared with a positive EBIT of $93 million in 4Q13. The full year 2014 also had a negative EBIT, totalling $995 million, compared with 2013’s positive EBIT of $418 million.

For 4Q14, Bombardier Aerospace’s EBIT before special items totalled $54 million, compared with $94 million in 4Q13. For 2014 in total, EBIT before special items was $437 million, compared with $388 million in fiscal year 2013.

The first four CS100 FTVs continue with flight testing activities and, as of 10 February 2015, 967 flight hours have been flown. Ground testing activities on FTV5 are ongoing and it is expected to be handed over to the flight test team by the end of the first quarter of 2015. The first CS300 aircraft has been handed over to the flight test team and is being readied for its first flight which is expected to take place by the end of the first quarter of 2015. The total CSeries firm orders and other agreements reached 563, with 21 customers in 18 countries, including 243 firm orders.

In 2015, Bombardier Commercial Aircraft expects a negative EBIT of approximately $200 million, including the dilutive impact of the initial years of production of the CSeries programme, neutral cash flows from operating activities, net additions to PP&E and intangibles of approximately $900 million.

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