Bombardier To Reduce CRJ Production On Lower Orders; To Layoff Further 715 Employees - Update

(RTTNews) - Aerospace and rail transportation solutions provider Bombardier Aerospace ( BBD-A.TO | Quote | Chart | News | PowerRating) Thursday said it will be reducing its CRJ aircraft production rate as previously indicated, in response to the current economic downturn and airline industry environment that made it difficult to gain new aircraft orders, particularly for CRJ aircraft family.

The Montreal, Canada-based company stated that adjustment to CRJ aircraft production rate will result in the layoff of nearly 715 employees in Bombardier Aerospace's facilities in Montreal area. The layoff is expected to begin in January 2010 and last through the first two quarters of the next fiscal year.

The adjustment to the workforce level also include a small number of layoffs with regard to the decrease in production rate of Bombardier 415 amphibious aircraft. Severance costs in connection with the reduction in workforce are estimated to be about US$10 million.

Bombardier president and chief operating officer Guy Hachey said, "There are not enough projected CRJ aircraft sales to maintain the current production plans. Although we are in discussions with several airlines, we had to finalize our aircraft delivery schedule for the next fiscal year."

Reportedly, chief executive officer Pierre Beaudoin had said on November 9, 2009 that the company may have to reduce the production of regional jets at its Mirabel plant north of Montreal due to the slump in global civil aviation and sagging orders, which may have an affect on its labour force.

So far this fiscal year, the company has laid off nearly 4,360 people at facilities around the world. In February, Bombardier had announced a layoff of nearly 1,360 employees, when the company adjusted the production rates of its Learjet and Challenger aircraft. Further, in April 2009, the company had reduced about 10% of Aerospace's total workforce, or about 3,000 employees, at its facilities in Canada, U.S., Mexico and Northern Ireland, so as to adjust to collapsing demand in the business jet market due to the recession.

Bombardier said, recently, it achieved a milestone in CSeries aircraft program as construction got under way on its new state-of-the-art aircraft wing manufacturing and assembly facility in Belfast, Northern Ireland. The company stated that it is presently recruiting for over 500 positions for programs in fields of production support and engineering.

Bombardier further said that it continues to invest in current and in future products, including CRJ1000 NextGen, Learjet 85 and CSeries aircraft programs. "In September, we broke ground for the first building of our new CSeries aircraft Mirabel facility, which will be used for ground testing and certification activities," noted Hachey.

In the second quarter, the company's net income attributable to shareholders declined to US$198 million or US$0.11 per share from US$251 million or US$0.14 per share in the year-ago quarter. Revenues had risen slightly to US$4.95 billion from US$4.93 billion in the second quarter of fiscal 2008.

BBD-A.TO is currently trading on the Toronto Stock Exchange at C$4.60 per share, down C$0.17 or 3.56% on a volume of 28,140 shares. In the past 52-week period, the stock has traded in a range of C$2.29 to C$5.31.

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