08-01-2015, 03:42 PM
(07-31-2015, 06:03 PM)numberguy Wrote: If you are Bombardier's CEO/CFO, where do you cut? The areas with an external order backlog of $142B (Aero) or the area with a $30B order backlog? If I am a rail customer, I would be worried and want clarification.
As a CEO, you don't cut the parts that would endanger positive cash flow. The rail division has positive cash flow -- and cutting into manufacturing operations (as opposed to constraining future product development, for example, would endanger the money they can get from the rail division IPO.
For the IPO, it would make more sense to add some incremental resources to the rail division to make sure there are no further delivery delays. For example, temporarily adding 100 people to troubleshoot and resolve problems with deliveries would increase payroll costs by only 0.3% but could have a far greater impact on the IPO proceeds.