Bombardier to cut 3,000 jobs amid jet slowdown

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Bombardier Inc. said Thursday it will lay off another 3,000 employees or 10% of its aerospace workforce by the end of the year as it combats falling demand for business jets.


The reductions are in addition to the 1,360 layoffs Bombardier announced on Feb. 5 amid a slowdown in production of its Learjet and Challenger aircraft.


Altogether, this will mean 1,740 job losses in Montreal and 475 in Toronto, in addition to cuts at its facilities in the U.S., Mexico, and Belfast. While the cuts are largely unionized workers, they also include some management and contractual workers.


The Montreal-based plane and train maker said it expects to deliver 25% fewer corporate aircraft this fiscal year compared to last, when it delivered 235 business jets.


"Business aircraft demand has deteriorated rapidly during the second half of calendar 2008 and is expected to remain weak for the foreseeable future," the company said in a news release.


A lower forecast was anticipated from Bombardier after competitors Gulfstream and Cessna announced similar cuts due to higher-than-expected cancellations and deferrals.


The company said in February it only expected a 10% decline in business jet deliveries, which was substantially lower than competitor forecasts.


Severance costs related to the latest round of cuts, which will come from North America and the United Kingdom, are anticipated to total about $30-million.


"There is no doubt that we are going through challenging times," said Pierre Beaudoin, Bombardier's chief executive, in the release.


Bombardier still reported higher profit last quarter as well as for the fiscal year.


Net income climbed to $309-million (17 cents a share) in the fourth quarter ended Jan. 31, 2009, compared with a profit of $218-million (12 cents) in the same quarter a year ago. Revenue also grew to $5.4-billion from $5.2-billion in the fourth quarter of fiscal 2008.


Investors reacted favorably sending shares in the company up 10.5% in early afternoon trading to $3.36 on the Toronto Stock Exchange.


The financial results beat expectations by analysts of diluted profit of between 14 cents and 15 cents a share.


For the full year, profit topped $1-billion for the first time in company history. That compares to $317-million in fiscal 2008. Revenue was up 12.5% to $19.7-billion.


Still, orders at Bombardier Aerospace, the company's aircraft unit, have slowed considerably. The division said it received six net orders last quarter compared to 213 in the same period a year ago. Bombardier said it expects higher sales for its Q400 Turboprop aircraft though.


Bombardier Transportation, the company's train division, said orders were also down last quarter.


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