As per latest upcoming reports, Canadian multinational aerospace and transportation company, Bombardier Inc. (BBD.B) has cancelled its order worth US$ 1.75 billion of business aircrafts. The reason behind such a huge imposition is its confidence to anticipate in money-generating process by reselling the aircrafts to customers with some heed.
As per its new strategy, after ending a four-decade relationship with distributor TAG Aeronautics, it is looking ahead to book a US$ 278 million pretax charge in 4Q due to its initiatives for pulling off the intermediary spot between itself and aircraft buyers. Not to mention, Bombardier will take over sole responsibility for sales of new Challenger and Global aircraft in 21 Middle Eastern and North African countries – approx. US$ 133 million of the US$ 278 million charge is in cash with US$ 50 million having been paid in 4Q, meanwhile rest slated to be paid this year. Company is likely to announce 4Q earnings on 18th of February, 2016.
The overhauling of business is taking place due to its being subjugated amid financial turmoil worth US$ 5.4 billion program for C series commercial jets. The development of its largest-ever model is more than two years late and at least US$ 2 billion over budget – for which it is seeking ingestion of more government relief.
According to company’s spokesperson, Mark Masluch via a telephonic interview:
“The cancellation of these orders is a Bombardier-driven action to restructure the commercial agreements. The outcome of this is that we do expect to resell these aircraft and positions at a higher margin.”
Apart from this, where a lot of employments have been terminated, the company is further looking into job-cuts strategy for upcoming May at the business aircraft unit due to a slowdown in production of the Global 5000 and 6000 models.
