Bombardier reports loss in 2014, hires new chief executive

Bombardier, the Canadian parent of Learjet, posted a $1.2 billion loss on higher revenue last year and said it has a plan to raise more cash in 2015 with a new chief executive at the helm.

Bombardier Inc. said Thursday that Laurent Beaudoin will retire as chairman after more than 50 years. The post will be assumed by his son Pierre Beaudoin.

And effective Friday, Pierre Beaudoin will turn over his duties as Bombardier president and CEO to Alain Bellemare, an 18-year executive at United Technologies Corp., including its Pratt & Whitney unit, a major supplier of aircraft engines. Bellemare was most recently president and CEO of UTC Propulsion & Aerospace Systems.

The company also announced a financing plan that Pierre Beaudoin said in a conference call with analysts would include raising equity of approximately $600 million and up to $1.5 billion in debt, and suspend dividend payments for shareholders of its Class A and Class B stock.

Bombardier also said it created a new business segment called aerostructures and engineering services that will act as a supplier to other aircraft manufacturers and bring in new revenue to the company.

Bombardier has been working through a series of delays on its CSeries airliner, which is years behind schedule but is expected to receive certification this year. The costs to develop the airplane, which is under flight testing in Wichita, have risen to $5.4 billion, officials said in the conference call.

The company also has announced a “pause” in the development of the Learjet 85, saying market demand currently didn’t support the aircraft.

Bombardier said revenue in the fourth quarter of 2014 was $6 billion, compared with $5.3 billion for the same period last year. For the full year, revenue was $20.1 billion, compared with $18.2 billion in 2013.

The company recorded a $1.6 billion net loss in the fourth quarter of 2014 and a $1.2 billion loss for the full year. Bombardier attributed the bulk of the loss to the pause of the Learjet 85, which resulted in the layoff of 620 Learjet employees in Wichita and about 380 others at its plant in Mexico.

In 2014, Bombardier delivered 204 business aircraft, compared with 180 in 2013. That included 34 Wichita-built Learjets in 2014, a 17 percent increase from 29 Learjet deliveries in 2013.

It said it ended 2014 with 129 net orders for business aircraft, down from 305 the year before. The lower net orders likely partially reflect the pause to the Learjet 85.

Beaudoin insisted on the conference call that the company plans to lift its pause on the Learjet 85, but he declined to give a time frame.

“It definitely will come back,” he said, adding that the company is actively “monitoring market conditions” for when it can lift the pause on the midsize business jet.

In addition to announcing the new aerostructures and engineering services business – which Beaudoin said could include the manufacture of “nacelles, cockpits and fuselages” – officials said they would consider looking at “potential participation in industry consolidation.” Beaudoin and Bombardier chief financial officer Pierre Alary said that could include the sale of some of Bombardier’s assets but could also include the acquisition of another company.

When asked if the company is looking to sell its Learjet operations, Beaudoin said, “No.”

“We don’t have plans to sell Learjet,” he added.

Analysts said they weren’t surprised by Bombardier’s financial results.

Stern Agee analyst Peter Arment said in a note to investors Thursday that he expected weak fourth-quarter results following Bombardier’s announcement to pause the Learjet 85 and take a $1.4 billion charge because of that move.

Arment also said in the note that “cash burn continues to be a concern.”

Teal Group analyst Richard Aboulafia said in an interview that the company’s most recent financial report “is a portrait of a distressed company … a portrait of a company that really needs money.”

He said he was “taken aback” by news of the new CEO, but that it wasn’t completely unexpected.

“New leadership is a good idea, but is it too late?” Aboulafia said. “That’s the big question.”

Beaudoin said Bellemare will help the company get to the “next level.”

“We had a great opportunity in Alain being available,” Beaudoin said. “I felt it was a great opportunity and the right thing to do for Bombardier.”

Aboulafia said Bellemare is “an experienced and well regarded person in the industry.”

“They needed somebody from a major company that is well regarded,” he said.

This story was originally published February 12, 2015 at 7:35 AM with the headline "Bombardier reports loss in 2014, hires new chief executive."