June 30, 2003 – Finance Digest

Bombardier, Inc., shareholders were told at their annual meeting June 11 that the founding family will retain control of the Montreal-based manufacturer, despite disaffection with the two-class share structure.
New chief executive officer Paul Tellier told shareholders to hold on to their depressed stock, insisting that the company “is suffering from a temporary crisis of confidence.”
Bombardier will emphasize consolidation and conservative management in the next few years, as opposed to the rapid expansion of the 1990s, Tellier said.
“We have to rebuild our reputation as a company that not only has big revenue but is able to generate excellent profits,” said Tellier, who joined Bombardier five months ago. “We are still a long way from restoring our corporation to a higher level of performance and its historical levels of profitability.”
Chairman Laurent Beaudoin, son-in-law of founder J. Armand Bombardier, said the family will keep control of the company, and said he is “convinced that the interests of all shareholders will thus be better served and protected.”
The Bombardier family is among prospective buyers of the Recreational Products division that was the foundation of the Bombardier enterprise. The operation makes snowmobiles, ATVs, personal watercraft and engines.
At the same time, Bombardier said that it had bid on a 100-plane regional jet order, alternatively awarded to competitor Embraer of Brazil in a deal worth U.S. $3 billion.
Tellier said the company is satisfied with its aircraft offering, and predicted the worldwide restructuring of airlines, including Air Canada, will increase demand for regional jets as struggling carriers opt for smaller aircraft.
Beaudoin and Tellier were criticized by many of the 800 shareholders for their compensation while the company’s share value has dropped. In addition to an annual salary of $1.92 million, Tellier was granted one million stock options when he took the job.
Tellier said he expects Bombardier’s railway transportation division to compensate for depressed aircraft orders.
Bombardier also has announced the sale of its military aviation services unit for U.S. $90 million to Spar Aerospace, a subsidiary of U.S.-based L-3 Communications Corp. Toronto-based Spar is best known for developing the Canadarm robot arm used on the U.S. space shuttle.