Chad is the editor of AINalerts, AIN's daily business aviation newsletter, and is also the news editor at AIN Media Group.&nbsp;He has been writing about aviation, with an emphasis on business aviation, since 1994. Chad started his writing career at The Avion,&nbsp;the&nbsp;student newspaper at Embry-Riddle Aeronautical University in Daytona Beach, Florida, serving as editor-in-chief before graduating with a bachelor's in aeronautical science. After a stint as managing editor at Professional Pilot&nbsp;magazine, he joined&nbsp;AIN in late 1998. Chad holds a commercial pilot certificated with instrument and multi-engine ratings, and he also is a CFI/CFII. He lives and works from his home in Venice, Florida.

Online Editor

Chad Trautvetter

Bombardier ended months of speculation about the fate of the Learjet 85 when it confirmed on October 29 that it has formally cancelled the program. The decision comes a year-and-a-half after the all-composite midsize business jet first flew, in April 2014. When the company “paused” the program in January, the sole flight-test Learjet 85 had logged more than 70 flights.

 


Bombardier Business Aircraft cited “lack of sales following the prolonged market weakness” in its decision to cancel the program. “Although this is a difficult decision given the years of effort and hard work put into the program, it is the right decision given the market dynamics for this segment,” said Bombardier president and CEO Alain Bellemare.

 


When Bombardier first announced the pause, analysts pointed to the overstretched research and development agenda and the severe cash shortage Bombardier faced. On October 29 Bellemare conceded that the decision to cancel the program also reflected the reality of balancing multiple programs against the backdrop of a tougher market.

 


“It’s a really challenging segment and the program still needed money injected…You find yourself in that situation when you have too many initiatives,” he said. “You want to focus on what are the top priorities of the organization and then you look at the market challenge…for the Lear 85. That’s the reason we came to the conclusion that the market was not supporting further investment.”

 


The move comes at a cost. The cancelation triggered a $1.2 billion third-quarter charge, the bulk of which stemmed from write-downs on inventory, program tooling and other assets.

 


Bombardier’s order book also took a major hit. The company took in gross orders for 41 jets during the third quarter but suffered cancellations for 73–64 of them Learjet 85s–for a net loss of 32. Bombardier’s business jet backlog shrunk by nearly $4 billion year-to-date, to $20.3 billion.

 


As a result Bombardier’s Business Aircraft division posted an EBIT loss of $1.115 billion for the third quarter and of $900 million for the first nine months of the year. Combined with a $3.2 billion charge related to schedule delays on the CSeries, Bombardier reported a loss of $4.9 billion in the quarter, despite revenue intake of $4.1 billion.

 


<h2>Global 5000/6000 Production Cuts</h2>

 


Further fueling the Business Aviation division’s loss was the decision to <a href="https://www.ainonline.com/aviation-news/business-aviation/2015-05-07/bombardier-curb-global-5000/6000-production">scale back Global 5000 and 6000 production</a>. In July Bombardier revealed plans for a roughly 30-percent cut in production of the existing Globals.

 


Bombardier CFO John Di Bert acknowledged that reining in Global production “is resetting the level of advances at Business Aircraft” and lowering cash flow. Di Bert estimated that pared production will have a cash impact of about $1 billion this year. But he said this will not recur next year, adding that “adjusting the supply and demand was the right decision and it protects the brand value for the long term.”

 


Bombardier delivered 15 Globals in the third quarter, four shy of the number for the third quarter of 2014. For the first nine months, Global deliveries are down by three, for a total of 52.

 


In total for the quarter, Bombardier’s business jet deliveries were down by two aircraft. The tally included a six-delivery jump in Challenger 300/350s, but also three fewer Challenger 605s. The Learjet 70/75 program held steady at seven. For the first nine months, Bombardier is ahead with 135 business jets delivered, nine more than last year.

 


“Bombardier remains the largest business jet manufacturer in the industry with 33 percent share of deliveries and a portfolio of products ranging from the light to large categories,” Bellemare maintained. Aside from the substantial order losses from the Learjet 85 cancellation, he added, “In Q3 Bombardier Business Aircraft recorded one of its best quarters in years with gross orders for 41 aircraft. We are confident in our ability to maintain market leadership.”

 


Despite the cancelations and persistent talk that Bombardier has been shopping Learjet, the company maintains in its quarterly financial report that it remains committed to Learjet.

 


As for the company’s cash issues, Bombardier received some relief when the province of <a href="https://www.ainonline.com/aviation-news/aerospace/2015-10-29/quebec-government-throws-lifeline-cseries">Quebec committed to investing $1 billion in the beleaguered Bombardier CSeries program</a>. The investment gives the province a 49.5-percent stake in a new limited partnership in which the Canadian company will own the remaining 50.5 percent.

 


The investment by the Quebec government came three weeks after Bombardier and Airbus each confirmed that they had explored “certain business opportunities” together and <a href="https://www.ainonline.com/aviation-news/air-transport/2015-10-07/airbus-bombardier-end-cseries-talks">that talks had ended</a> following reports that Bombardier offered a majority stake in the CSeries to the European airframer.

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