Canadian aviation giant Bombardier announced Wednesday it was cutting 10 percent of its global workforce as the company undergoes major restructuring through next year.
The 7,000-job reduction “will be partially offset by hiring in certain growth areas,” such as in its nascent commercial aircraft division, Bombardier said as it released financial results.
Bombardier also announced it has signed a US$3.8 billion deal with Air Canada to buy 45 of its new CS300 jets, with options to purchase another 30 planes.
Deliveries of the all-new aircraft to Air Canada will begin in 2019, marking the first sale of the C Series — which has been billed as the first completely new aircraft design in the 100- to 150-seat category in more than 25 years — to a major North American airline.
It is also the largest single purchase of the C Series.
“Air Canada’s commitment is a strong endorsement of this outstanding aircraft,” Bombardier president and chief executive Alain Bellemare said in a statement.
The order, he said, “will become a catalyst for future orders in North America and around the world.”
The C Series was launched to challenge the dominance of Airbus and Boeing in medium-range, single-aisle jetliners, and go head to head with their workhorses, the Airbus A320 and the Boeing 737.
The Bombardier jetliner was supposed to offer significant fuel savings over its rivals but a two-year delay in its development allowed competitors to freshen up their lineups.
The plunge in oil prices has also made the C Series a harder sell. Indeed, Bombardier had received no new orders for its C Series since September 2014, prior to the Air Canada purchase.
The Canadian airline’s order brings the total to 288 firm orders.
Bombardier started off building snowmobiles in 1942 and grew into a multinational with rail and aircraft divisions.
After this third round of job cuts in about a year, it will be left with 64,000 employees worldwide. Most of the cuts will be in Canada and Europe.
“Throughout 2016 and 2017, we will adapt our global manpower to current market conditions, while hiring to support growing segments, such as the C Series,” said Bellemare, referring to the job cuts.
“We’re taking this difficult decision to make Bombardier stronger,” he said.
It will help the company become “more competitive and deliver improved financial performance going forward,” he added.
Bombardier said it posted revenues of $18.2 billion in 2015, a 9.6 percent drop from the year before. Profits fell to $326 million.
It received last year $2.5 billion from the government of Quebec, where it is based, to get the C Series off the ground, giving up a 49.5 percent stake in the program and 30 percent of its rail unit in exchange.
Ottawa, meanwhile, continues to consider the business case for providing financial assistance to the company, Transportation Minister Marc Garneau said.
Since receiving the cash injection from Quebec, Bombardier’s stock had fallen 40 percent to a record low of 72 Canadian cents (US$0.52) on Friday.
It has since bounced back, jumping nearly 25 percent in morning trading following the company’s announcement to Can$1.11 in Toronto.