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Date Posted: 13:05:32 10/09/04 Sat GMT
Author: Lynn
Subject: Bombardier Aerospace cutting 2000 jobs-560 cuts in N.I. (San Diego Union-Tribune)

  Bombardier Aerospace cutting 2,000 jobs, warns that Delta bankruptcy could bring more

ASSOCIATED PRESS

1:56 p.m. October 7, 2004

MONTREAL – Bombardier Aerospace will lay off 2,000 employees – 1,440 in Montreal – as it slows the production rate of its 50-seat Canadair Regional Jet to face the realities of the struggling U.S. airline industry.

The company also warned Thursday of 1,200 more job cuts if Delta Air Lines, one of its major customers, files for bankruptcy protection as feared.

The cuts, including 560 in Belfast, Northern Ireland, are to take place over nine months starting in November. The cuts represent about 7 percent of the work force of the Bombardier Inc. division.

"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.

While the CRJ has been a market success, with 1,142 deliveries to date, the market for the original 50-seat model is getting saturated.

The 70- and 86-seat stretch models have slower sales and face stiff competition in that category from Embraer of Brazil.

Bombardier will drop the production rate of the 50-passenger CRJ200 to one aircraft produced every four days from one every three days currently. Production of the 70-passenger CRJ700 and 86-passenger CRJ900 will continue at the rate of one every three days, both models combined.

Bombardier will decide by early 2005 if it will go ahead with a new generation aircraft family that seat between 115 and 135 passengers, but even if that proceeds, sales would be almost five years away.

The company said the aerospace division will not meet its previous guidance of break-even earnings before income taxes in the current fiscal year, because the layoffs will cost $26 million in severance and other matters.

Bombardier said it still expects to deliver about the same number of aircraft as last year, when it delivered 324 of all types.

Analyst Bob Fay of Canaccord Capital said he is more worried about Bombardier's Delta warning, as the company may have a financing exposure on 300 CRJs that Delta now flies. A bankruptcy court filing by Atlanta-based Delta would have repercussions on Bombardier's entire outlook.

"The business jet market can't carry them on its own," Fay said.

Bombardier class-B shares dropped 19 cents to close at $2.79 Thursday on the Toronto stock market.

Spokesman John Paul Macdonald said the market for its 70- and 86-seat versions remains strong, while orders for business aircraft reached 60 in the first half of this year compared with 24 a year ago.

Aerospace industry forecasts for aircraft in the 70- to 120-seat range predict production of more than 3,700 regional aircraft from 2004 to 2013 representing a value of over $84 billion.

"It's safe to say that after over 10 years in the marketplace and over a thousand aircraft out there, the 50-seat RJ is becoming a mature program," Macdonald said.


 
 

 
Find this article at:
http://www.signonsandiego.com/news/business/20041007-1356-canada-bombardiercuts.html
 

 S

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