The Quebec Superior Court has granted approval for a class action lawsuit against Bombardier Inc. This litigation, initiated by shareholder Denis Gauthier in 2019, targets the aerospace company’s alleged misrepresentations of its financial health during a critical period in 2018. The claim involves investors who acquired Bombardier stock between August 2 and November 8, 2018.
Throughout 2018, a challenging year for the Montreal-based firm, Bombardier and its leadership, including then-CEO Alain Bellemare and then-CFO John Di Bert, purportedly failed to adequately disclose vital information pertinent to the company’s financial projections. This period culminated in a dramatic announcement during the third-quarter results, where Bombardier revealed a decision to eliminate 5,000 jobs and divest two business units. The company also reported that its free cash flow was “well below” the projected levels necessary to break even, excluding any benefits from a recent factory sale—a fact underscored by an analyst at the time.
The fallout from these revelations was stark, with Bombardier’s stock value plummeting by 23% on the day of the announcement. This drop highlighted the stark discrepancies between the company’s earlier optimistic financial forecasts and its actual financial performance.
Currently, Bombardier has pivoted its business model, focusing solely on manufacturing business jets. In response to the court’s decision to allow the class action to proceed, Bombardier has indicated it may challenge the ruling. The court has yet to deliberate on the merits of the allegations themselves. This case underscores the critical importance of transparency and timely disclosure in maintaining shareholder trust and market stability.