Bombardier has stated it will record $278m pre-tax special charges for its business aircraft division in the last quarter of 2015, when they release the financial result for the fourth quarter and 2015 fiscal year in February.
Out of $278m, $145m will be non-cash charges. In the last quarter, $50m cash was paid out by the company and the remaining cash will be paid this year.
Bombardier incurred special charges after it restructured the company’s business division’s sales team and distribution agreements, as well as some customer commercial agreements.
These agreements led to the cancellation of 24 firm orders, with a total value of $1.75bn at list prices and 30 optional orders.
Bombardier Business Aircraft president David Coleal said: "We are changing our sales strategy to increase our focus on direct channels.
"This, coupled with our robust transformation plan, will increase our long-term profitability.
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By GlobalData"Our overall business model enhancements will leverage our class-leading aircraft, which continue to be outstanding business tools for operators in all regions of the world."
According to Bombardier, the latest series of restructuring was done to improve the long-term profitability of its business aircraft.
Following restructuring, Bombardier will directly look after its sales activities through the company’s current sales teams.
Coleal added: "Restructuring these commercial agreements will strengthen our business and solidify our long-term profitability.
"Our sales team is well equipped to increase our position in the marketplace, and ultimately, we expect our current industry-leading backlog to become even stronger."
Last January, the company halted its Learjet 85 business aircraft programme due to weak demand for the jet. The company terminated the Learjet 85 programme in October and incurred a $1.4bn special charge.
Image: Bombardier terminated Learjet 85 business aircraft programme in October. Photo: courtesy of Bombardier.
