Bombardier reduces output, plans layoffs
Bombardier has cut aircraft production figures for the current 2001-02 financial period in reaction, it said, to the economic crisis sparked by the September 11 terrorist attacks on the U.S. In a September 26 press conference at its Montreal headquarters, the business jet maker also announced an initial 3,800 layoffs throughout its aerospace group and warned that 2,700 more jobs may have to go early next year if trading conditions do not improve soon.
Output for business and regional aircraft this year has been reduced to 370 units–a 10-percent cut on the projected figure of 410, but roughly the same number as were produced last year. Around 180 of this year’s output will be business aircraft–down from 203 last year. The production cuts have been made almost equally between the business and regional aircraft families.
The initial 3,800 layoffs started on the day of the announcement and will run through year-end. In Canada, some 2,005 positions will be cut from the company’s Montreal facilities, 650 in Toronto and 30 in North Bay. The Wichita facility will lose 635 employees and the Belfast, Northern Ireland payroll will be reduced by 480.
Increased Interest in Flexjet
Bombardier president and CEO Robert Brown said the reductions in the business aircraft workforce are necessary despite the fact that the company is now increasing production of the new Continental super-midsize jet. He also announced an order for three Challengers for the Swiss air ambulance operator Rega.
Brown said that in the wake of the terrorist attacks, there have been an increased number of inquiries about Bombardier’s Flexjet fractional-ownership program. However, he warned that it is too early to determine whether the security crisis will lead to increased demand for business aircraft, as some industry observers have predicted. Announcing its latest quarterly results in August, Bombardier had, in fact, already reported a softening in demand for business aircraft.
Most of Bombardier’s revisions of its production levels have been founded on feedback from the beleaguered airline industry. Although no orders for its regional jet family have yet been canceled, Brown said it is “prudent” to downsize the company to make allowance for the significant decline in traffic levels. Bombardier is the first business jet maker to announce workforce cuts since last month’s attacks.