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Bombardier Wins Air Canada CSeries Order

Bombardier received the first order in 16 months for the CSeries, overshadowing news of the plane maker's lower-than-expected quarterly results and plan to cut 7,000 jobs.

The company said that it signed a letter of intent to sell Air Canada 45 CSeries aircraft, with an option for 30 more. The order, worth USD$3.8 billion based on list price, is the first for the CSeries since September 2014.

The Quebec government, which gave Bombardier a USD$1 billion lifeline last year, said it would drop a lawsuit against Air Canada. In return, the airline agreed to conduct maintenance on CSeries jets in the province.

The Canadian government said it was still in talks with Bombardier on its request for federal aid. The country's transport minister said Ottawa had put no pressure on Air Canada to buy jets from the plane maker.

Bombardier chief executive Alain Bellemare said the company still wanted federal assistance for the CSeries, which has been plagued by delays and cost overruns.

"We are hoping the federal government would come very close to what Quebec did," Bellemare said. "Quebec came with a very good structure where they have equity ownership, and we've been benefiting significantly from that."

Bellemare said Air Canada's order was a strong endorsement for the line of jets, which faces fierce competition from the Boeing 737 and Airbus A320.

Bombardier now has 678 total orders and commitments for the CSeries, including 243 firm orders.

JOB CUTS

Despite the boost from the Air Canada order, Bombardier said it was continuing with its restructuring and planned to cut its workforce by about 7,000 over the next two years.

Bombardier, which has about 64,000 employees, expects to record USD$250 million to USD$300 million in restructuring charges in 2016 for the layoffs.

The job cuts will be mainly in the company's aerostructures and engineering services and transport divisions in Canada and Europe.

At the same time, Bombardier will ramp up hiring to support production of the CSeries and its new Global 7000 business jets.

The company forecast 2016 revenue of between USD$16.5 billion and USD$17.5 billion.

Bombardier's net loss narrowed to USD$677 million in the fourth quarter, from USD$1.6 billion a year earlier.

Excluding special items, Bombardier broke even.

Bombardier said it expected free cash flow usage of USD$1.0 billion to USD$1.3 billion this year.

(Reuters)