Dramatically reduced demand for business aircraft has prompted Bombardier to cut Learjet and Challenger production rates, and layoff 1,360 workers or 4.5% of its 30,000-strong workforce.
At the same time, the Canadian airframer says rising demand for its largest turboprop, the Q400, calls for an increase in production, while production of its CRJ Series regional jets will remain unchanged.
Consequently, Bombardier is forecasting total aircraft deliveries for its 2009/10 fiscal year to be "slightly less" than the 2008/09 fiscal year, with about 10% fewer business aircraft, and approximately 10% more commercial aircraft.
The Canadian airframer delivered 353 aircraft for the 2008/09 fiscal year ended 31 January, including 239 business aircraft, 110 commercial and four amphibious. This compares to 361 aircraft deliveries in the previous fiscal year.
Significantly, Bombardier received far fewer aircraft commitments during the year, booking 378 aircraft orders, net of cancellations, compared to an exceptional 698 orders for the previous fiscal year.
"The industry is experiencing strong turbulence and we anticipate more volatility in the short term. The fundamentals of Bombardier Aerospace are solid, but we expect we will face more challenges this year," says Bombardier Aerospace president and COO Guy Hachey.
"While the corporation has taken significant steps to strengthen its operational and financial position over the last years, we must continue to be prudent and take decisive action. We will thus ensure our continued success over the long term and maintain our leadership position by meeting our customer commitments and by continuing to invest in our current and future products."
Hardest hit by the world economic slowdown is Bombardier's business aircraft dealings, with the company seeing a greater than usual level of deferrals and cancellations.
As a result, it is reducing its Learjet and Challenger production rates. The book-to-bill ratio for fiscal year 2008/09 stands at 1.1.
This decision is expected to result in a total workforce reduction of approximately 1,010 temporary workers/subcontractors and 350 permanent employees. Reductions will take place at Bombardier's facilities in Montreal, Wichita and Belfast over a five-month period starting this month.
The severance costs associated with the manpower reduction of permanent employees are expected to be less than $5 million.
"These are very challenging times. The decision to reduce our workforce was difficult to make and we fully recognize the impact it will have on our affected workers," says Hachey.
The company notes that overall employment numbers will remain essentially at a similar level as recruitment for new permanent open positions, mostly for the new aircraft programmes, including the CSeries, will partly offset the reduction of 1,360 jobs.