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Bombardier freezes salaries for 38,000 non-unionized employees

Bombardier’s has sold 201 C Series jets, with a goal of 300 sales before delivery of the first planes in mid to late 2015.

Ryan Remiorz/THE CANADIAN PRESS

Bombardier is freezing the salaries of its roughly 38,000 non-unionized employees as it deals with costly delays in the launch of its CSeries commercial jet.

The freeze covers workers in all divisions, including its head office in Montreal, spokeswoman Isabelle Rondeau said Friday.

"The end of the salary freeze is undetermined," she said.

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The Montreal-based transportation giant has already announced 1,700 layoffs in its aerospace division and Rondeau said company is also cutting travel budgets and reducing business travel.

"We've had strong orders. However, we've had some challenges regarding the achievement our profit margins," she said in explaining the need to cut expenses.

Bombardier has delayed entry into service of its CS100 plane until the second half of 2015, with the larger CS300 six months after that. The company has said the aircraft's cost will rise to about $4.4-billion (U.S.) as delays in first deliveries add about $1-billion in development costs and capitalized interest.

Analysts have raised concerns about whether the delay will cause a cash crunch for the company and force it to issue more shares or seek more funding.

But Bombardier has given assurances that the company has enough flexibility to deal with the situation, saying it has $3.4-billion of cash and access to $1.4-billion in credit.

Still, Moody's Investors Service and Standard & Poor's have both downgraded Bombardier's ratings.

Last month, Bombardier reported adjusted net income fell 29 per cent to $129-million in the fourth quarter, down from $181-million a year earlier.

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Bombardier makes planes and trains and operates globally.

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