Gautrain partner Bombardier is firing 5,000 employees, just as SA is looking for new trains
- Bombardier announced a major overhaul of its business on Thursday that includes the sale of more than $900 million (almost R13 billion) in assets and the loss of 5,000 jobs as part of its third-quarter earnings report.
- The company will lay off the employees over the next 12 to 18 months.
- Bombardier built the current Gautrain trains, and is in the running for a deal to build many more as the Gautrain system expands.
Canadian industrial giant Bombardier announced a major overhaul of its business on Thursday that includes the sale of $900 million (R13 billion) in assets and the loss of 5,000 jobs as part of its third-quarter earnings report.
Bombardier built the Gautrain trains, and was a shareholder in its operating company until it divested of those shares in 2017.
The Development Bank of Southern Africa this week confirmed that the Gautrain is looking for R4 billion to increase its number of trains by 50% ahead of a planned expansion, and that Bombardier is among the bidders for that contract.
Also in the running are local firm Egoli Rail, and Chinese company CRRC, which made headlines first for a huge alleged bribe paid to the Gupta family, then for pulling out of commitments to local investment.
It looks like Bombardier's rail transport division will remain, but the company is pulling back from other lines of business, with its reorganisation including moving engineering talent to its business jet division. Bombardier CTO Francois Caza will also lead a new Advanced Technology Office, or ATO, that will apply aviation technology to its train business.
The Montreal-based firm has also agreed to sell its Q Series turbo-prop airliner programme along with the de Havilland trademark to fellow Canadian aircraft manufacturer Viking Air for $300 million.
The company also sold its business aircraft flight and technical training business to another Canadian firm, CAE, for $645 million. According to Bombardier, the sale of these two assets will net the company $900 million.
The sale of the Q Series programme comes one year after Bombardier effectively gave away its prised C Series airliner programme to Airbus. That aircraft has since been renamed the Airbus A220.
"With our heavy investment cycle now completed, we continue to make solid progress executing our turnaround plan," Bombardier president and CEO Alain Bellemare said in a statement. "With today's announcements, we have set in motion the next round of actions necessary to unleash the full potential of the Bombardier portfolio."
Bombardier will also lay off 5,000 employees from across its various divisions. The layoffs are expected to take place over the next 12 to 18 months and are expected to save Bombardier $250 million by 2021.
Despite the layoffs and sale of assets, Bombardier saw earnings jump 48% over the same period last year with a profit of $271 million on $3.6 billion in revenues during the third quarter of 2018.
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