Bombardier Inc., faced with delays and new cost overruns in developing the CSeries jet, replaced Chief Executive Officer Pierre Beaudoin, suspended the dividend and said it will sell debt and equity to bolster the balance sheet.
The stock slumped, extending the worst decline of 2015 among Canadian industrial companies. Bombardier named Alain Bellemare, who left United Technologies Corp. in January, as CEO. Beaudoin, the grandson of the company’s founder, becomes executive chairman while his father Laurent Beaudoin, who led Bombardier for more than 30 years before becoming chairman, will retire.
The CEO change and capital-raising moves underscored the pressure from the CSeries, which Beaudoin has said he’s counting on to help the company almost double sales by the end of the decade. Montreal-based Bombardier said Thursday the CSeries, which has been postponed four times, will now cost $5.4 billion — up $1 billion from a year earlier.
Bellemare becomes one of only a handful of outside CEOs to run the family-controlled company since it began operating in 1942 as a maker of snowmobiles in rural Quebec.
“They recognized that they needed new leadership,” Chris Murray, an analyst at AltaCorp Capital in Toronto, said in a telephone interview. “The performance to date has certainly been an issue, particularly in aerospace. They are moving into a period where a number of programs are set to begin, and need to ensure that they have effective execution in order to generate the level of profitability that the market is expecting.”
The widely traded Class B shares tumbled 12 percent to C$2.69 in Toronto, bringing their slide for this year to 35 percent amid concerns about the company’s liquidity position.