Alain Bellemare, ex-CEO of United Tech division named Bombardier CEO

Feb. 12, 2015: Alain M. Bellemare, 53, was named president and CEO at Bombardier , it was announced today ahead of the company’s 2014 earnings call. The appointment is a move to restore confidence in Bombardier, its Aerospace division and the CSeries program.

Stakeholders in the CSeries program we had talked to expressed a desire for Pierre Beaudoin, who has become executive chairman, to step down.

According to Bloomberg Business, Bellemare has been consultant at United Technologies Corp. since January 31, 2015. He previously was President and CEO of UTC Propulsion & Aerospace Systems from July 26, 2012, to January 31, 2015. He also served as the president of Pratt & Whitney Canada and a number of other executive positions.

Beaudoin, previously CEO of Bombardier, faced an increasingly difficult leadership vacuum at Bombardier Aerospace as a revolving door of executives came and went during the course of the last several years. As we reported yesterday, a real crisis in confidence among customers has developed.

Bellemare’s long experience at Pratt & Whitney, including PW Canada, where the CSeries’ Geared Turbo Fan engine is built, will undoubtedly be viewed with favor among these customers. One industry official called Bellemare a “heavy hitter.”

Last December, the new CEO of PW’s parent, United Technologies, said research and development funding would be cut back and PW would not be allowed to pursue development of a “big engine” GTF.

NASDAQ.com reported at the time that, “United Technologies said Alain Bellemare, who had overseen both the Pratt and UTC Aerospace Systems businesses, would leave the company and that his position would be eliminated in favor of more direct lines of oversight between Mr. Hayes and the individual business units.”

Bombardier still targets entry-into-service of the CSeries later this year, but one key customer believes the schedule will slip to the first quarter next year. Richard Aboulafia, a consultant wit the Teal Group and a long-time critic of Bombardier’s sales and management of the program, yesterday predicted EIS will be mid-2016. Aboulafia made his forecast at the Pacific Northwest Aerospace Alliance conference in Lynnwood (WA).

 

14 Comments on “Alain Bellemare, ex-CEO of United Tech division named Bombardier CEO

  1. Bombardier found an elegant solution to the problem of replacing the CEO who happens to be the son of the Chairman and the grand-son of the founder. Laurent Beaudoin simply stepped aside to make room for his son Pierre as the new Chairman while remaining honorary chairman. That is the perfect solution under the circumstances and the best way to preserve the cohesion of this prestigious family while saving face.

    There is no question that BBD needed to find another CEO. The question was who? The miracle is that the perfect candidate became available when he was most needed. If Pierre Beaudoin had been removed earlier Alain Bellemare would not have been available at the time.

    The new CEO is an experienced aerospace executive with an excellent track record. My impression is that he will infuse Bombardier with a new dynamism. He comes in at a time when investors, customers and employees were waiting for a change.

    Alain Bellemare’s appointment becomes effective tomorrow, Friday the 13th, 2015. I wish him good luck. 😉

    • Hmmm… Maybe Mr Bellemare’s sudden availability was not such a miracle. He steps down at UTC… acts as a consultant for 1o days… and suddently becomes CEO of Bombardier.

      Getting Mr Bellemare could be the price Bombardier made P&W pay for the troubles with the CSeries engines 😉

      Will Mr Bellemare be able to accomplish what Paul Tellier was unable to do, and which ultimately, according to persistent rumors, cost him his job? Get rid of the two-class share structure.

      The suspension of dividend on Class A and B shares is another piece of good news for a company in cash preservation mode.

      • The circumstances were very different for Paul Tellier. He came in after 9/11 when Bombardier was on the verge of Bankruptcy. BBD needed a complete restructuring at the time and Tellier’s extraordinary track record indicated he was going to be the saviour. But three of his decisions went against the will of the Chairman.

        1) He put up the recreational products division for sale.
        2) He wanted to scrap the CSeries for good.
        3) He wanted to get rid of the two-class share structure.

        a) By selling the recreational product division Tellier was touching a sacred cow. As we all know, what made Bombardier a household name was the famous Ski-Doo. As a consequence the family of the founder had to raise capital to buy back the division and operate it as an independent entity.

        b) For Laurent Beaudoin the future of the company rested with new products like the CSeries. One of the the first things he did after Bombardier had acquired Canadair in 1986 was to approve the development of the very audacious Canadair Regional Jet, and he saw the CSeries as a continuation of that bold product development strategy.

        c) Laurent Beaudoin wants to hold on to the two-class structure for obvious reasons. It gives the family total control over the company. But there is another les obvious reason and that has to do with the fact that a family business, because that is what BBD is, is more focussed on the long term perspective. This makes Bombardier unique in this world of short term profits.

        • Bon résumé, Normand.

          Having a longer term vision when the company stays family-controlled has paid-off for Ford, the only American automaker to avoid bankcruptcy in the last recession.

          Bombardier will be able to buy back BRP when they are flush with cash after the CSeries success.

          • Bombardier will never buy back BRP because there is no incentive to do so as both companies are more or less owned by the same people. And if the CSeries becomes as successful as you rightfully expect it to be, the cash will be invested in new variants like the CS500, CS700 and CS900. And new Learjet models and a revamped CRJ and a Q400 successor and… There is no end to it. 😉

  2. I am not ready to say that the company as a whole is (was) mismanaged. What has been mismanaged in my opinion is the Learjet programme. I sensed that something was wrong when the Grob Aerospace technology had to be abandoned and Bombardier switched to another technology. Besides, I never believed in composite for very small fuselage. In my opinion it’s not worth the hassles and risks that are associated with this material. So I am not surprised today that the Lear 85 is considered a technical disaster. I view this unfortunate venture as a mistake more than a classic case of mismanagement.

    If we add to this the fact that the CSeries is running late it was to be expected that the financial results of the aerospace division would be bad. And 1B negative cash flow sounds almost reasonable in the present circonstances. But I do recognize that when the two problems are compounded, the scrapping of the Lear 85 and the succession of delays with the CSeries, it is a bit scary. Execution will have to stay perfect until EIS, otherwise additional delays could bleed BBD to death.
    And if customers never rushed to buy the CSeries, the low cost of fuel is one less incentive to do so.

    We have to keep all this in perspective though and recognize that other programmes have done a lot worst at Airbus (A380) and Boeing (787). The CSeries has always been very well managed despite all the problems it had. We have to understand that it is a very complex business and small things can turn into an overnight nightmare, if I can use the expression.

    On the positive side Bombardier Transportation is doing very well. It is particularly well managed by Lutz Bertling and it can continue to support the long term investments that are required in the aerospace sector. For Bombardier Aerospace would not have been able on its own to support the development of the CSeries. That is the main difference between Embraer and Bombardier. Trains are to Bombardier what military hardware is to Boeing. These often have different business cycles and one can support the other when necessary.

    What I am less sure of is the desirability of breaking up the Aerospace division into three separate business units: Commercial Aircraft, Business Aircraft and Aerostructure. My understanding is that it was designed to give more autonomy and flexibility to the respective units. It also forces the CEO to be more directly involved in the three departments because they now report directly to him. That is one hot potato that Bellemare has de facto inherited as he arrives in the midst of this major restructuring. I don’t know what his vision is but it’s too late to reverse the decision. But I am afraid that in the process a lot of egos were crushed and many great people were lost. If mismanagement there was it is on the human side.

    • It seems like a lot of mistakes have been made.

      If that’s not a management issue I don’t know what is.

      Frankly the level of mistakes for the size and position of the company look to be on part with Boeing and Airbus.

      A well managed C series could have been a real game winner, now it has to struggle with not only the competition but getting its act together (credibility ) . Airlines know Boeing has the resources to throw as much money at a program as needed, not nearly as true for Bombardier.

      • Bombardier is not as experienced as Boeing and Airbus are when it comes to developing an advanced product on the scale of the CSeries. For A&B it would be a relatively small undertaking but for BBD it was equivalent to an A380 I would say. That being said I dont think that BBD as a whole is, or was, mismanaged. As for the CSeries I still believe that considering the experience and level of expertise BBD had at the start, it was, and still is, an extremely well managed project.

        They had two major issues, one with the software and the other with the engine; but I don’t think they should be blamed for that. Perhaps next time they will opt to develop the software in-house. As for the engine it could have happened to Airbus with the PA1100 and it would have delayed the A320neo by three or four months. But the CSeries is “in the whole” for much more than that and this is partially due to the previously mentioned software development problems at their FBW supplier. Now, how much of the overall delay could we attribute to that? Frankly I don’t know. But we can estimate that a portion of the overall delay can be attributed to Bombardier’s lack of experience with projects on that scale. And possibly an internal lack of expertise as well. But I don’t think that this would qualify as mismanagement per say.

        Of course that is only the assessment of a casual observer. Perhaps if I was a high level internal witness I would judge the situation differently. But for now I can only evaluate BBD’s performance from what I can see from the outside. And I am relatively pleased with what I do see. Of course I am worried by the delays and the lack of substantial orders but I remain confident that when the CSeries enters service with various operators around the world the passengers will appreciate its high level of comfort and the operators will praise its technical merits. And when that happens Bombardier will deserve a standing ovation.

  3. Well said.
    BBD can be long term mismanaged because of the various government subsidies it receives.
    C-serie program is not a disaster but the business case of C serie is questionable and that is a bigger issue.

  4. I agree with (what I think is) Normand’s take on this: Laurent Beaudoin had decided that Pierre simply could not get the job done, and this organization gets a competent CEO on board while saving face for Pierre. Even as only an hnourary chairman, I do believe Laurent will remain firmly in charge of the strategy, with Bellemare responsible for execution. Pierre … well, he will chair the board meetings.

    • You figured that right thysi. That is exactly what I was trying to convey. But I have to disagree with you on the remark you make about Pierre. As you will see in another post Pierre has been appointed Executive Chairman with M&A and Financing responsibilities. This is a very good thing as it will leave more time to the new CEO to familiarize himself with the new company. We have to keep in mind that although Bellemare has an outstanding track record he has never managed a publicly traded company before. In other words he never had the opportunity to deal directly with angry shareholders. 🙁

      • Having Pierre focus on financing and M&A could work well, that should give Bellemare a free hand to put the operations into shape — which, I suspect, is also what Laurent is also expecting him to do.

        Pierre may be Executive Chairman, but Laurent votes 40% of the shares. I think that’s rather more clout in the end!

  5. The Conservative party essentially gave away Canadair in the 70-80 to Bombardier. If Mr. Beaudoin cannot manage the company give it back to the Canadian government and they will run it properly. Look at the fine job they are doing with Canada Post.

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