Recognizing that Bombardier’s financial performance has “disappointed,” recently named Bombardier president and CEO Eric Martel outlined a six-point plan to boost the company’s business that has included the alignment of its business aircraft production with demand and increased outreach in the aftermarket segment.
Addressing the Bombardier annual meeting of shareholders late last week, Martel stressed that while progress has been made to streamline and focus the business, “We have not met our financial targets and your expectations. Repeated program delays and technical challenges have tarnished our reputation for operational excellence.”
He further acknowledged that performance has shaken stakeholder confidence and said, “This is unacceptable. I have given the clear message inside the company that we must again become predictable in our performance and we must move with urgency to restore our reputation and culture around operational excellence.”
Martel, who stepped into the role in March as the company has been moving to divest all of its major businesses outside of its business aviation activities, expressed confidence in achieving the company’s goal of establishing clear and predictable performance.
He noted steps already taken, including the announcement earlier this month to lay off 2,500 workers and reduce production. The layoffs came as Bombardier has been bracing for a difficult second quarter as the Covid-19 pandemic resulted in production disruptions, delayed deliveries, and slowed orders. Bombardier believes that the pandemic could cut delivery schedules industry-wide in the range of 30 percent to 35 percent.
Martel said the company has had daily leadership calls, an “intense focus” on cost and cash flows, and regular communications with customers and key suppliers on order confirmation and the resetting of delivery schedules. “There is still uncertainty as to how long the pandemic will last or how quickly our market will recover. However, it is clear the short term will be challenging,” he said, adding that the decisions surrounding workforce reductions “are never taken lightly, but are absolutely necessary given the impact Covid-19 has had on our market.”
The objective of aligning Bombardier’s aviation production with market demand is designed to not only manage through the crisis but to position the group to be more profitable and make it a steadier cash-flow generating business, he added.
At the same time, Bombardier has established as another objective “vigorously pursuing business aviation aftermarket growth opportunities.” The aftermarket has seen steadier business through the pandemic as operators have used the time to address maintenance and upgrades. Bombardier also in recent years has invested millions to aggressively expand its aftermarket capabilities.
Another of Bombardier’s objectives includes continuing to “proactively manage both of our businesses through the Covide-19 crisis to ensure our company’s long-term sustainability,” such as taking steps to ensure the health and safety of its workers and install new disinfectant and other cleanliness protocols. The other objectives of the six-point plan include making its rail business more predictable, completing the divestitures of its aerostructures and rail businesses, and “setting the foundation for long-term success by defining a clear vision for our company and resetting our culture.”