Bombardier Aerospace cutting 2,000 jobs

CTV.ca News Staff

One of Canada's leading aerospace companies is making a massive cut to its global workforce. As many as 2,000 Bombardier Aerospace employees in Canada and Ireland will be affected.

Citing weak demand for its Canadair Regional Jets, the company announced the cuts on Thursday.

As many as 540 jobs will be lost in Belfast, Northern Ireland, with another 1,400 facing redundancy in the Montreal area.

Some 260 employees at the St-Laurent factory will lose their jobs in two groups, in November and May.

Other Montreal-area cuts total 310. The Belfast staff reduction is set for January and July.

Another 410 will be cut from Mirabel in November and January, and the company's Dorval, Que., plant will face 460 job cuts next May and next July.

According to the Montreal-based company, it had little choice but to announce the layoffs.

"Given the context of the airline industry and the financial difficulties facing a number of our customers, we must continue to be prudent and proactively manage our production rates and delivery schedule to reduce our exposure to the cancellation or deferral of orders,'' Bombardier Aerospace president Pierre Beaudoin said in a statement.

Should a deal with the struggling Delta Airlines fall through, the company warned that as many as 1,200 more cuts could be added.

Because the $26 million US in severance costs for the 2,000 redundancies announced Thursday will come out of the company's current fiscal year, Bombardier said it can no longer meet its targets.

"Bombardier Aerospace cannot maintain its previous guidance of break-even at the earnings before income taxes (EBT) level for the current fiscal year."

Following the announcement, Bombardier shares were trading down slightly in early trading Thursday.

Something tells me this has nothing to do with the state of the Airline industry but more with the fact they are trying to free up some internal cash for their 100 seat project.

You can't free up what you don't have. Bombardier does not get any cash for a jet until it is delivered to the customer....no customer - no cash to run the business, just alot of metal sitting on the ramp

You call this news?

bentheredunthat wrote:You can't free up what you don't have. Bombardier does not get any cash for a jet until it is delivered to the customer....no customer - no cash to run the business, just alot of metal sitting on the ramp

How is that related to laying off employees? And BTW, there are other income sources for aircraft manufacturers!

To avoid jets sitting on the ramp the production line reduces the amount planned for the year....deliveries get delayed.....planned inflow of cash goes away.......people get laid off
I agree that other sources of revenue from the other divisions keep the big boys happy, but each division handles their own budget....
Planned backlogged deliveries (not what it used to be), future sales ( ???) and the production rate governs eveything.....

Aircraft maker weighed down by weak demand

Woes could worsen if Delta falters

By BRENT JANG
TRANSPORTATION REPORTER
Friday, October 8, 2004 - Page B4


In the post-9/11 world of aircraft orders, Bombardier Inc. has been caught in a persistent downdraft of shaky customer demand for its regional jets.

Bombardier is facing a dwindling order backlog for its CRJ series of aircraft, which have 50 to 86 seats. And it could take years before the Montreal-based company has a product ready to compete against Brazil's Empresa Brasileira de Aeronautica SA (Embraer) to meet demand for larger regional jets, typically with about 100 seats.

After the Sept. 11, 2001, terrorist attacks on the United States, Bombardier faced an airline industry with too many planes chasing too few passengers. While long-term demand for regional jets seating 70 to 135 passengers now appears to be strong, Bombardier is still deciding whether to enter the game of building jets with 100-plus seats.

Demand for Bombardier's 50-seat jets is waning as the aviation sector looks to the 90-to-110-seat range in particular as a better bet since such jets are more comfortable than the cramped quarters of the 50-seaters. In an era of rising energy costs, the larger new planes are also garnering attention because they're more fuel efficient and cheaper to operate than smaller aircraft.

Cameron Doerksen, an analyst at Dlouhy Merchant Group, said a chief concern remains two troubled carriers -- US Airways Group Inc. and Delta Air Lines Inc., which account for 36 per cent of Bombardier's backlog of 238 planes.

US Airways of Arlington, Va., filed last month for protection under Chapter 11 of the U.S. Bankruptcy Code for the second time since 2002, and Atlanta-based Delta is trying to avoid a trip to bankruptcy court.

Bombardier says it has taken steps to reduce the impact of US Airways' woes, but the aircraft maker still needs to stretch deliveries of 29 orders over a longer time horizon than originally planned.

If Delta falters and can't take delivery of 41 jets ordered, then Bombardier warns that it could cut a further 1,200 jobs, on top of 2,000 layoffs to be phased in between next month and July, 2005.

Orders from the United States for another 34 aircraft could be lost, if Washington, D.C.-based Independence Air changes its mind about buying Bombardier planes, said Canaccord Capital Corp. analyst Robert Fay.

U.S. demand for Bombardier's regional jets also has been slowed by strength in the Canadian dollar against its U.S. counterpart.

Airline customers such as Air Canada have placed orders for Embraer's ERJ-190 aircraft, with a 93-seat configuration. Air Canada has also placed orders for 15 Bombardier 50-seat CRJ-200 jets and 15 75-seat CRJ-700s but, in the meantime, Bombardier is playing catch-up against Embraer