* Company to slash workforce by about 7,000 over next two
years
* Forecasts 2016 revenue below analysts' estimates
* Proposes reverse stock split
* Quebec government drops lawsuit against Air Canada
(Adds details from conference call)
By Allison Lampert
MONTREAL, Feb 17 (Reuters) - Bombardier Inc BBDb.TO
received the first order in 16 months for its CSeries jets,
sending its shares up as much as 30 percent and overshadowing
news of lower-than-expected quarterly results and plans to cut
7,000 jobs.
The Montreal-based company said on Wednesday that it signed
a letter of intent to sell Air Canada AC.TO 45 CSeries, with
an option for 30 more of the narrow body aircraft. The order is
worth as much as $3.8 billion based on the CSeries' list price.
Separately, the Quebec government, which gave Bombardier a
$1 billion lifeline last October, said it would drop a lawsuit
against Air Canada tied to its not living up to aircraft
maintenance commitments in the province. In return, the airline
agreed to conduct maintenance on CSeries in the province.
Shares of Bombardier, which also benefited from a planned
reverse stock split, closed up 21 percent at C$1.09 in Toronto
after climbing to C$1.17.
Bombardier Chief Executive Officer Alain Bellemare said the
company still wanted federal assistance for the CSeries, which
has been plagued by delays and cost overruns.
"We are hoping the federal government would come very close
to what Quebec did," Bellemare said on a conference call,
referring to Quebec's equity stake in the CSeries.
The Canadian government said it is still in talks with the
company on its request for aid and stressed that it had put no
pressure on Air Canada to buy jets from Bombardier.
Ottawa promised on Wednesday to ease some restrictions on
Air Canada to help the carrier be more competitive.
Air Canada CEO Calin Rovinescu said the Quebec government's
decision to drop the lawsuit was part of the broader deal to
purchase the CSeries and use a third-party Quebec supplier to
perform all of the heavy maintenance on the aircraft.
"It was a good compromise," Rovinescu told reporters.
Earlier on Wednesday, he called the jet purchase "100 percent a
commercial deal" with no government pressure.
"That being said, the governments (of Quebec and Canada) do
see the value of Air Canada stepping up to the plate at this
moment in time ... and it gives a shot in the arm to the
aerospace industry in Canada."
Bombardier now has 678 total orders and commitments for the
CSeries, including 243 firm orders. The jet competes with Boeing (N:BA)
Co's BA.N 737 and Airbus Group's AIR.PA A320 series.
The CSeries order, slated for delivery starting in 2019 and
largely to replace some of Air Canada's older Embraer EMBR3.SA
jets, is yet another setback for the Brazilian planemaker which
also missed out on a United Airlines UAL.N order last month.
Embraer did not comment on the Air Canada order. It said it
remained committed to its positive relationship with Air Canada.
JOB CUTS
Despite the boost from the Air Canada order, Bombardier
said it was continuing with its restructuring and will cut its
workforce by about 7,000 over the next two years. Of these about
2,800 cuts will be within Canada. Nearly half the cuts will be
in Bombardier's rail arm that has a large workforce in Europe.
Bombardier, which has about 64,000 employees, expects to
record $250 million to $300 million in restructuring charges in
2016 for the layoffs.
The job cuts will be mainly in the company's aerostructures
and engineering services and transportation divisions in Canada
and Europe.
At the same time, Bombardier will ramp up hiring to support
production of the CSeries and its new Global 7000 business jets.
The company forecast 2016 revenue of $16.5 billion to $17.5
billion, below analysts' expectations of $18.07 billion,
according to Thomson Reuters I/B/E/S.
Bombardier's net loss narrowed to $677 million, or 31 cents
per share, in the fourth quarter from $1.6 billion, or 92 cents
per share, a year earlier.
Excluding special items, Bombardier broke even, but analysts
were expecting a profit of 2 cents per share.
Quarterly revenue came in at $5.02 billion, well below
analysts' expectations of $5.48 billion.
Bombardier, which received recent cash infusions from
pension fund Caisse de dépôt et placement du Québec as well as
the Quebec government, said it expected free cash flow usage of
$1.0 billion to $1.3 billion this year.
The company also confirmed Reuters' report of a reverse
stock split to prop up its sagging share price, which had been
below C$1 since late January, its lowest in 25 years.
Bombardier will determine the ratio for the reverse stock
split later, but it said it was targeting an initial
post-consolidation price of C$10 to C$20 per class A or Class B
subordinate voting share.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Bombardier CSeries orders vs. rivals http://tmsnrt.rs/2177dwI
Boeing, Airbus and Bombardier http://link.reuters.com/ryt75w
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(Addition report by Euan Rocha in Toronto and Amrutha Gayathri
in Bengaluru; Editing by Lisa Von Ahn and Tom Brown)