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Bombardier Experiences Turbulence at the Top as CEO Replaced, Dividends Suspended, Projects Postponed


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In light of less than spectacular returns for Bombardier Inc., Pierre Beaudoin announced in February of 2015 that he will retire as CEO of the company. The resignation signals the end of the Beaudoin family’s (descendants of the original founder Joseph-Armand Bombardier) reign at the head of the company. Although, Beaudoin will remain involved as executive chairman, controlling mergers, takeovers, and other major finances. Alain Bellemare, former executive at United Technologies, will assume the newly vacated position.

The decision comes amid problems with the company’s four times delayed CSeries, whose development costs now total in the arena of USD$5.4 billion (over five times the original projected cost of USD$1 billion). The CSeries’ aircraft engines are manufactured by Pratt & Whitney and the failure of these engines during testing in June of 2014 is a major factor of the aircraft’s chronic postponement. Ironically, Pratt & Whitney is a subsidiary of United Technologies Corporation - the company from which Bombardier has headhunted its new CEO.

Furthermore, Bombardier is also experiencing problems with other product lines. The company’s Learjet 85 is two years behind schedule, with development currently suspended as of January 2015. The suspension has caused a layoff of approximately 1,000 employees and a USD$1.4 billion pre-tax charge. The company has posted a USD$1.59 billion loss in the fourth quarter of 2014 and cut off the distribution of dividends to investors on both Class A and common shares, citing the need to raise USD$2 billion in debt and equity.

Announced in 2004, Bombardier envisioned the CSeries models - the CS100 and CS300 (a longer variant) - as competition in the narrow-body jet airliner market segment against the Boeing 737 and Airbus A320 series. As of now, the company’s future appears to be riding on the pending success of these jets.

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