Bombardier Inc. chief executive Paul Tellier, who took over the world's third-largest airplane maker in January, has raised C$1.2 billion ($880 million) in a stock sale and targeted more than 3,000 job cuts as he seeks to keep the company from losing its investment-grade credit rating.
He's in danger of failing after Bombardier this month had to split a $4.3 billion order from U.S. Airways Group Inc. with its chief rival, Empresa Brasileira de Aeronautica SA. Standard & Poor's and Moody's Investors Service, the biggest credit-rating firms, have said Tellier will have trouble increasing cash flow and rebounding from last year's C$615 million net loss unless the airline industry recovers from its worst slump.
"They've got to keep the books full, and they've got to keep (production) going," said Bill Girard of Scotia Cassels Investment Counsel, which owns Bombardier bonds.
Montreal-based Bombardier Tuesday said fiscal first-quarter profit dropped about 54 percent to 5 Canadian cents a share. A debt-rating downgrade would trigger as much as C$1 billion of repayments to customers and bondholders and hurt earnings.
The company had profit of 15 cents a share in the year-ago quarter, when it sold more Challenger and Learjet corporate jets. Bombardier's stock had gained 20 percent since April 7 after the company boosted its share sale by half and set a price of C$3.25 each. The stock fell 17 cents to C$3.80 in Toronto as of 4:05 p.m.
State, local and regional officials in Utah have been hopeful that Bombardier Aerospace will put an aircraft maintenance, repair and overhaul facility near Ogden. The company so far has been noncommittal on the project — which could lead to thousands of direct, indirect and induced jobs — because of its financial woes, which have led to thousands of layoffs.