Alstom announces cost reduction plan with the elimination of 1,500 jobs worldwide

Alstom is trying to get back on track. The railway group, weighed down by commercial and financial difficulties, announced on Wednesday November 15 a cost reduction plan with the elimination of 1,500 jobs, or 10% of commercial and administrative functions. The French multinational has set itself the objective of reducing its debt by 2 billion euros by March 2025, via an asset sale program and possibly, “depending on market conditions”a capital increase, according to a press release.

After this announcement, Alstom’s share price plunged by more than 11% in initial trading on the Paris Stock Exchange. The world’s second largest railway manufacturer has been going through a crisis since announcing to investors on October 4 that it was excessively burning cash. Its free cash flow plunged into the red during the first half of 2023/2024 of its financial year shifted to -1.1 billion euros.

“A clear call for change”

This cash flow problem in the first half “constitutes a clear call for change”insisted the CEO of the Henri Poupart-Lafarge group cited in the results press release. “Although demand remains at a sustained level, despite some volatility, our commercial performance has been weak”he added, in particular due to the delay in finalizing the Aventra program, 443 trains intended for the United Kingdom and inherited from the Bombardier Transportation portfolio purchased at the start of 2021, and a lower payment of deposits than expected.

The restructuring also affects the top of the group since it was decided to dissociate the functions of chairman of the board of directors from that of general manager from July 2024. Henri Poupart-Lafarge, CEO since February 2016, will only remain general manager. Former Safran CEO Philippe Petitcolin is to be named chairman of the board of directors.