page 21 Bombardier Inc. Annual Report 2003-04 Acknowledgements Transportation To that end, we continue striving every day to make good on our commit- ments. At today’s Bombardier, it’s about focus. It’s about resolve. It’s about accountability—knowing where the buck stops. The global transportation industry has also been undergoing fundamental changes due to factors such as deregulation, the emergence of private- sector players and revamped policies and practices in the lynchpin  European Union market. However, ongoing industry consolidation—in which Bombardier has been a major participant—has not yet been reflected in the elimination of excess production capacity. For instance, many of our own European plants have been operating recently at less than 50% capacity. Decisive action was called for. Subsequent to year end, we put new lead- ership in place at Bombardier Transportation and announced a major reorganization of its European manufacturing network, designed to elimi- nate overcapacity, decrease costs and increase margins. The Transportation group will reduce its global workforce by 6,600 positions, representing 18.5% of the total, over the next two years. Seven production sites in five European countries are slated to be closed, and an industrial site improve- ment program designed to increase operating efficiency will be introduced at a number of other locations. Implementation of the restructuring plan will take place in consultation with our workplace partners and in full  compliance with laws and regulations in the various jurisdictions. It’s also about teamwork. In that respect, I would like to take this opportu- nity to formally acknowledge several recent newcomers to our executive ranks, as well as individuals who have taken on added responsibilities. Pierre Alary, formerly Vice President, Finance, for Bombardier, was named Senior Vice President and Chief Financial Officer. Moya Greene, a former sen- ior vice president at Canadian Imperial Bank of Commerce who also has experience in the upper echelons of the Canadian federal public service, joined Bombardier as Senior Vice President, Operational Effectiveness. André Navarri, whose credentials include three years as president of the Alstom Group’s transportation arm, was appointed President of Bombardier Transportation, effective February 22, 2004. Wolfgang Toelsner, formerly head of Bombardier Transportation’s Locomotives and Freight division, was named Chief Operating Officer of the Transportation group. Together, they bring a wealth of talent and experience that further enhances our team’s  ability to get the job done. We have also revamped the Bombardier Transportation organizational chart to simplify lines of responsibility, reduce administrative over- heads and—most critically—improve accountability. As well, the group  is pursuing a procurement initiative designed to wring more value from the supply chain. While regrettable, the site and workforce reductions are absolutely  necessary to balance Bombardier Transportation’s industrial footprint with projected market demand. I am confident that the restructuring plan will enable the group to compete more aggressively in global passenger rail markets. In fact, I am pleased to report that, in the final months of the fiscal year, not only were we winning a goodly percentage of contracts up for grabs, but we also stand to make acceptable margins on the new business. This is the result of a more rigorous bid preparation process that factors in ample consideration for contingencies. I also wish to thank employees throughout the Company for their commit- ment and hard work. I understand it is particularly tough for people who are part of an organization that has enjoyed so much success in the past to adapt to changed circumstances. However, I’m confident that the resiliency for which our people are known—and which helped Bombardier overcome earlier obstacles to becoming a global powerhouse—will enable us to  successfully meet the current challenges. Your efforts are appreciated. As well, I wish to reiterate my appreciation for the continuing support of the majority shareholder. Our Executive Chairman of the Board, Laurent Beaudoin, and the Bombardier family have stood squarely behind our efforts, not only regarding the sale of the heritage recreational products asset, but in terms of the entire action plan. Finally, it would be remiss of me not to thank the Board of Directors for its support. As fiscal year 2005 continues to unfold, we will press ahead with implemen- tation of the restructuring and streamlining at Bombardier Transportation— focusing on costs, productivity, improving the procurement chain and fur- ther refining the bid process. As well, we will be looking to further increase our share of the value-added services segment. Going forward, we also will be working with customers, suppliers and industry partners to bring about increased standardization in transportation solutions. Things are unfolding according to plan at Bombardier Capital, which is on track in terms of results and the winding down of portfolios. Our emphasis here continues to be on the profitable and professional management of continuing business and the steady reduction of discontinued activities. Priorities for fiscal 2005  Bombardier Capital Leveraging Bombardier’s strengths At Bombardier Aerospace, we will continue to focus on improving our competitiveness in order to leverage our leadership positions in regional and business aircraft. Other priorities include facilitating export financing for commercial aircraft sales and, in the longer term, supporting the propo- sition that Canada adopt a comprehensive new aerospace policy that would address R&D and manufacturing as well as sales financing issues, thereby putting Canadian players on more of a level playing field with foreign com- petitors. We have also established a multidisciplinary task force to examine the feasibility of developing a larger, new-generation commercial aircraft. As I stated at the beginning of this letter, there is a lot more progress to be made. However, I can assure you that team members are united in their resolve to successfully implement the remaining steps of the action plan. Together, we will continue making good on our commitments. Improving our competitiveness and enhancing our profitability will give us the financial wherewithal required to pursue the third year of our strategy— capitalizing on the attractive opportunities for profitable growth that we  are confident will come our way in the future, while maximizing value for Bombardier shareholders. The imperative now is to leverage these portfolios by honing our execu- tion skills and becoming better project managers. This is particularly critical in Transportation, where every contract is essentially a one-off project. Simply put, our aim is to produce the best products at the best prices in both core businesses—a combination that adds up to a superior value equation. Among Bombardier’s many strengths is the fact that we have superb  product and services portfolios in rail transportation equipment, business jets and regional aircraft alike, as well as strong global market positions on which to build.  Signed by PAUL M. TELLIER PRESIDENT AND CHIEF EXECUTIVE OFFICER