Photo: Paul Chiasson, The canadian Press
If the aircraft manufacturer is in need of a boost to get through the turbulence caused by the health crisis, the president would prefer to even turn to the private sector rather than to knock at the door of governments.
After the nose pitched down because of the pandemic of COVID-19, the recovery, while fragile, is stronger than expected on the side of business jets, has found Bombardier, who departs of new layoffs, and the need for financial support of government, for the time being.
If the aircraft manufacturer is in need of a boost to get through the turbulence caused by the health crisis, its president and chief executive officer, Eric Martel, would even turn to the private sector rather than to knock at the door of governments.
“We continue to discuss with (the federal and Quebec governments), but we are not in a position where we need help,” said the former president and chief executive officer of Hydro-Québec, on Thursday, in a press briefing on the sidelines of the annual meeting of shareholders – where the severance pay granted to the ex-boss Alain Bellemare, up to $ 17.5 million, is invited.
Mr. Martel has not had time to rest after having taken the reins of the company, on the 6th of April last. The COVID-19 has paralyzed the world economy, and the business aircraft industry, vulnerable to the vagaries of the economy and to which Bombardier carries out its reorganization, has not escaped the slowdown.
As well, two weeks ago, the company announced the layoff of 2,500 people, or 11 % of its aviation division, as it expects a decline in deliveries of the order of 30 % of the business jets in the industry over the next 12 months. Some 1,500 employees in quebec have been hit.
“We carried out the adjustments of cadence that we had to do and we will continue to move forward with (the staff) that we have”, said Mr. Martel, in response to a question on the possibility that there might be further redundancies.
There has been less of a “dozen cancellations” at the level of orders, he said, which is far short of “several dozen” observed during the financial crisis of 2008.
Culture and transparency
In his message to shareholders, the new chief executive of Bombardier reiterated that it was necessary to change the culture of the company, in addition to insist on the need for transparency and predictability in terms of financial results, without, however, blame his predecessor.
Under the leadership of Mr. Bellemare, the company has undertaken a painful restructuring plan aimed at reducing its heavy debt load of more than 9 billion US$. This has resulted in the sale of several assets, an exit from the aviation business and the sale of Bombardier Transportation, but also by delays and implementation problems, particularly in the rail division, which has undermined the reputation of the company.
“I think that on the operational level, there are things that, in the last few years, explain some of our results,” said Mr. Martel.
He even stated that his team had started to look on a new “strategic plan” that could be presented to shareholders towards the end of the year or the beginning of 2021. It is not a question of study options, such as sale of assets or closing of the capital of the company, said Mr. Martel, but rather to assess the business opportunities available to Bombardier in the framework of its turn.
Yet the wages
In the framework of the annual meeting, the chairman of the board of directors of Bombardier, Pierre Beaudoin, has estimated that the severance pay awarded to Mr. Bellemare was not “atypical” when compared to what is done elsewhere.
The result of a new revolt of the major institutional investors, including the Caisse de dépôt et placement du Québec (CDPQ), who have decided to oppose the approach of the aircraft manufacturer in regard to remuneration, the grandson of Joseph-Armand Bombardier has been challenged on the issue.
“The board (of directors) has met its obligations (contractual) have been negotiated in good faith and which are not atypical when one takes the time to compare what is observed in several canadian public companies and us,” replied Mr. Beaudoin, a question of the Movement of education and defence of shareholders.
In addition to a sum equivalent to two years of wages, Mr. Bellemare will be entitled to a special payment of $ 4.9 million if the sale of Bombardier Transportation, Alstom, announced last February, just before his departure, came to fruition.
This arrangement of the outset had been especially criticized by the CDPQ, which was deemed “excessive”.
Despite the wave of opposition, the proposal surrounding the non-binding approach of Bombardier in the matter of pay has been accepted in a proportion of 94,52 %. Thanks for the shares with multiple voting rights, the family Beaudoin-Bombardier control 50.9% of the voting rights, whereas it only holds a fraction of the approximately 2.4 billion shares outstanding.