Canadian company Bombardier considering options for its train business

The Quebec-based Canadian company Bombardier says that it is considering `multiple options` for its train business as the unit continues to provide strong profits and sales, enabling the company to break even in its latest quarterly results.

Overall, the Montreal-based company that makes mainly planes and trains used up $570 million US in the quarter that ended June 30. While the company lost $296 million or 13 cents per share this was an improvement over the same period last year when they lost $24 million or 24 cents a share. However, revenue fell 5 percent to $4.09 billion. However if special charges such as employee severance, and also benefits from a tax adjustment are considered, analysts had expected the company to post a one cent loss per share. Instead the company broke even.

Investors were actually buoyed by the results with shares up 5.4 percent on Friday AM to $2.54. This is a rise of 63 percent from its low of $1.56 last September. Alain Bellemare the CEO said of the train business:“We have multiple options that we are pursuing. We will do what is right to keep on growing the great franchise.” Bellemare is two years into a five-year turnaround plan that has seen many critics of government support and increases in executive pay as show on the appended video. Bellemare became CEO in a shakeup in 2015.

Bombardier is in the final stages of combining rail operations with Germany`s Siemens. Bellemare refused to talk of future partners or time-lines. The pension fund manager Caisse de depot et placement du Quebec owns 30 percent of the firm and the Quebec government has a 49.5 percent share in the C Series airliner program. The US Boeing Corp. wants the US government to subject the C Series planes to hefty tariffs. No doubt Trump will favor such a move.

Bombardier used to be a key Canadian defence contractor but as part of its restructuring it sold off its military-related work. As part of its restructuring program Bombardier announced in October of 2016 ``.. that, by the end of 2018, they will slash up to 7,500 jobs or more than 10 percent of 70,900 employees from 2015. About a half of job cuts will be done in railway technology unit.`` However, executives have seen their pay rates soar: "Bombardier's senior executives saw their compensation rise by nearly 50 per cent last year at a time when it laid off thousands of workers, ... Total compensation for the Montreal-based company's top five executives and board chairman Pierre Beaudoin was US$32.6 million in 2016, up from US$21.9 million the year before, according to a proxy circular ahead of its May 11 annual meeting." Top executives in power when disaster struck the company are financially rewarded while workers are laid off. The government approves the executive moves by providing more support for the company.