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Bombardier pushing ahead with Russian plant

July 31, 2014, Montreal - Montreal-based plane and train manufacturer Bombardier Inc. is pushing ahead with its plans to build an aircraft plant in Russia, despite stepped up sanctions aimed at Russian business.


July 31, 2014
By Reuters

Bombardier chief Pierre Beaudoin told analysts and reporters on a
conference call Thursday that talks are progressing with state-owned
industrial and defence conglomerate Rostec, aimed at setting up a plant
to assemble Q400 turboprop planes in Russia.

“Commercial discussions are continuing between us and Rostec,” Mr. Beaudoin said. “We are working hard to get an agreement.”

 

A
key issue, he acknowledged, is what sanctions will be in place once a
deal is arrived at. While the current sanctions would not interfere with
the construction of a plant, he said, “this is a situation that evolves
every day… When and if we get to an agreement, we will have to consider
the overall environment and the sanctions at that time.”

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Russian
authorities have already approved production of the Q400 in a special
economic zone in Ulyanovsk, a city about 900 kilometres southeast of
Moscow.

 

Bombardier does other business in Russia. Its rail unit
has a strong presence in the signalling market, and it sells business
aircraft there. Those businesses are functioning relatively normal, Mr.
Beaudoin said, except for business aircraft where “the market is weak in
Russia right now.”

 

On the conference call, Mr. Beaudoin clarified
the situation surrounding the flight testing of its crucial new
C-Series narrow-bodied jet, which was grounded in May after an engine
failure.

 

Flight testing will resume “within weeks,” he said, and
the program will not see any significant delays. The aircraft will still
be ready for delivery by the second half of 2015, as planned, he said.

 

As
for the reorganization the corporate structure and job cuts announced
last week, Mr. Beaudoin said he made the changes because he was
“dissatisfied with the execution” of the aerospace group, which is being
split into three divisions. This will make them more “agile and
flexible,” he said, and reduce overhead costs by about 15 per cent.
Aeorspace president Guy Hachey is also leaving the company, a move Mr.
Beaudoin said was Mr. Hachey’s “personal choice.”

 

There will be a
special charge because of the reorganization this year, Mr. Beaudoin
said, although he would not be specific on the numbers, or say at which
company locations the 1,800 layoffs would take place.

 

In the
second quarter, Bombardier’s total revenue rose 10.4 per cent to
$4.89-billion (U.S.), although net income fell 14 per cent to
$155-million, or 8 cents per share.