MONTREAL — Bombardier is undergoing another executive shakeup, this time hitting the transportation giant's most senior level, as it adjusts to the soaring cost of the new CSeries passenger jet.
Laurent Beaudoin — a member of the family that has controlled the company since it was founded — will be replaced as chairman of the board by his son Pierre Beaudoin, who is stepping down as chief executive after nearly seven years.
Alain Bellemare, who spent 18 years at United Technologies Corp. including at its Pratt and Whitney division, becomes Bombardier's president and CEO effective Friday.
"What's important is that we ensure the company's financial health in the long-term. This is a jewel in Quebec and Canada," Bellemare, 53, said in a conference call with analysts on Thursday.
Bellemare earned US$6.3 million in 2013 and US$10.6 million in 2012 as CEO of UTC's propulsion and aerospace systems.
Pierre Beaudoin said he called Bellemare just after his departure from UTC was announced Jan. 15. Beaudoin denied it was in response to investor criticism about management's credibility in light of program development delays and cash concerns.
"I thought it was a wonderful way to reinforce our team. It had nothing to do with external pressure," he said.
Beaudoin, 52, said he will be a full-time chairman focused on merger and acquisition opportunities and finances. He said he'd work closely with Bellemare but rejected suggestions he would effectively be a co-CEO.
Benoit Poirier of Desjardins Capital Markets said Bellemare's arrival will be well-received by investors "because of the street's lack of confidence in current management and Bellemare's strong background."
The changes came as the company said it lost $1.59 billion or 92 cents per share in its fourth quarter compared with a profit of $97 million or five cents per share a year ago. Revenue totalled $5.96 billion, up from $5.32 billion in the fourth quarter of 2013.
The loss for the quarter included a $1.4-billion charge related to a pause of its Learjet 85 program announced last month. Bombardier said it would suspend work on the new model of Learjet in order to preserve cash for other parts of the business.
Company executives also revealed during a conference call Thursday that the CSeries program's cost has soared to US$5.4 billion, up from US$4.23 billion a year ago following a four-month delay in aircraft flight tests because of an engine failure. The aircraft is scheduled to enter into service by year-end.
Bombardier (TSX:BBD.B) was most actively traded issue on the Toronto Stock Exchange on Thursday. The shares were down 38 cents or 12.5 per cent at $2.66 in midday trading.
On Thursday, Bombardier also announced that it will suspend dividend payments and will seek shareholder permission to issue US$600 million in new shares and about US$1.5 billion in debt to bolster its cash reserves.
It will work at reducing debt by using some operations to participate in industry consolidation in transportation and aerospace sectors.
"It's not that there is a business segment that is for sale," Beaudoin said. "We are world leaders in many sectors and sometimes it's time to see if there's a way to team up to be an even stronger world leader."
The company says the recapitalization plan will be supported by the Bombardier-Beaudoin family — which has been led by Laurent Beaudoin for more than 50 years. The company was founded by Pierre Beaudoin's grandfather J-Armand Bombardier, a Quebec inventor best known for the Ski-Doo snowmobiles.
Beaudoin said there are no plans to end the multi-voting shares that ensure the founding family retains control.
