Bombardier aerospace staff told to cut discretionary spending
TORONTO (Reuters) - Bombardier Inc has told staff in its aerospace unit to suspend discretionary spending for the rest of the year so that the Canadian company can keep cash for its costly C-Series and Learjet 85 aircraft development programs.
The world's third-biggest plane maker said in an internal memo sent to more than 35,000 aerospace division staff on September 5 that cash must be preserved for business priorities, company spokeswoman Haley Dunne said on Monday.
The "cost containment" memo, from vice-president of finance Maired Lavery, directs staff to suspend non-essential hiring, most travel and to take other measures, such as cancelling off-site meetings, suspending training, and reducing the use of consultants to save money.
"We're reminding employees that we're in a period of peak spend on our development programs," Dunne said.
"We need to focus our cash on the essentials of the business priorities and for the rest of the year we're asking them to pause spend, if they can, in areas that are non-essential."
Bombardier's more heavily traded class B shares were down 5 Canadian cents, or 1.4 percent, at C$3.53 on the Toronto Stock Exchange at mid-session Monday.
The spending freeze will be reviewed January 15, when employees return from holidays, Dunne said.
Canaccord Genuity analyst David Tyerman said a reduction in discretionary spending is "logical" given the weak economy, moderate plane sales and heavy spending at Bombardier.
"We knew that the cash flow was tight; they've been talking about challenges now for a while and it's true, as they said, that they're at a point where they're spending a lot of money on those programs," he said. Continued...