Bombardier suffers blow to Lear 85 program

Bombardier has announced a $1.4B write off, and pause of the all composite Learjet 85 program. To go with the program, they are reducing their workforce by 1,000 jobs, mostly in Mexico and Kansas. The program was launched in 2008, with plans for fly by the end of 2013. First flight was in April of 2014, and orders have been soft.

The pause allows them to focus on the CSeries, Global 7000 and Global 8000 programs. Bombardier delivered 290 aircraft last year, after estimating they would deliver 280.

Bombardier has taken a $1.4 billion impairment charge after deciding to "pause" its Learjet 85 programme due to continued weak demand in the light jet sector.

The write-off will be recorded as a pre-tax special charge in fourth-quarter results scheduled for release by the Canadian airframer on 12 February.

Bombardier also will further reduce its workforce by 1,000 employees, with the job cuts focused on Learjet 85 manufacturing sites in Queretaro, Mexico, and Wichita, Kansas.

The all-composite Learjet 85 was launched in 2008 with plans for service entry by the end of 2013. Bombardier blamed schedule delays initially on problems with certificating the design and manufacturing of the business jet's all-composite structure.

www.flightglobal.com...

So, was the money already invested into a product that ended up sitting on the shelf? Why all the layoffs?

When it says "weak" demand, are there hangers of unsold jets or are they made to order? Did they pre-anticipate wrong and hire too many staff?

a reply to: eisegesis

They're made as orders come in. In this case they didn't get many orders after they announced the program, and the few they had were either cancelled, or they were able to switch to other aircraft. The Learjet has always been popular, and they expected a composite aircraft to be more popular than it has been, but large cabin aircraft have become more popular as they have more range, and more payload.

They're cutting jobs because they were hired specifically for this program. The other programs are fully staffed, and they don't really have the business to keep them on. They took a shot on this program, and missed. It happens occasionally, especially in the business jet world.

a reply to: Zaphod58

That's too bad. 620 jobs in Wichita are gone as well and they were also downgraded after a 26 percent decrease in stock. Are these normal fluctuations in the business jet world as well?

a reply to: eisegesis

The Business Jet world is always risky. It's been a long time since it's taken a hit like this though.

what pisses me off is when companies layoff workers to cover their losses. Although thats not the case here as the workers layed off are part of the defunct program, it just made me think about that. "oh we lost 1 billion dollars...lets lay off 10000 workers to cover that so the stock only slips a quarter of a percent."

a reply to: boomer135

Yeah, that pisses me off too. "We screwed up, so let's punish the workers, so we don't lose out on our billion dollar bonus."

a reply to: Zaphod58

sounds like the railroad....

a reply to: boomer135

Hell, they're all the same. It doesn't matter what industry you're talking about.

a reply to: Zaphod58

Risky indeed...

The company said it needs to focus on development of its all-new C Series jet in the 100- to 150-seat category, a huge gamble that involves going directly up against giants Boeing Co. and Airbus SAS; it is also continuing with some business-jet platform revamps.

Link

Lets go from one risky endeavor to the next! As long as there's more workers to lay off we can take as many chances as we need to.

Sound like they need to stick to planes OR trains, not both.

a reply to: eisegesis

The CSeries is in trouble but isn't going to be a total flop. It was grounded for months because of a problem with the geared turbofan requiring a redesign. Technically that wasn't Bombardier's fault, but it still hurt the program. They do have a number of orders for it, so it's not looking like a total flop, but it's going to be hard to break into that market.

The current order book stands at 243 firm orders, 162 options, and 17 purchase rights. That's 63 CS100s, and 180 CS300s firm.

a reply to: eisegesis

If they want to play ball with the big boys they might play their game too. Lay-off a ton of employees only to re-hire them in 6 months for some other program. The 1000 that got laid off might be getting a call back if their larger jet takes off.

a reply to: Sammamishman

At one time, Bombardier was one of the few jet manufacturers to assemble complete aircrafts in Mexico. I'm guessing the saying over there is, "better to have been laid off then to have never been hired at all", lol. I guess they've been conditioned to the system. Sad really.

a reply to: Zaphod58

Not sure how to feel about this one. My family has a long history of being screwed over by Canadair, but I can take no joy when I know it is the little guys, the workers and their families who will suffer. The company will get another grant and wriggle its way out of this, and the board will get richer. They always do.

Canadair was the first company to work with composites, even before the US millitary, but that was before Bombardier got a hold of them. The R&D lab was called the coal mine, and it was there that the world was first introduced to Graphite epoxy as an airframe material. The engineers thought my Grandfather was mad when he made the first honeycomb structures, and they fought him tooth and nail before they built him an autoclave. They laughed and laughed at the notion of composite airframes. It appears that the vultures at Celenese and Hexel made out like bandits in the days after they made it all go away. Boxed up the protoypes, and shipped from montreal to storage in Ireland. He never saw a dime for his work, his name written off of the patents, and when they started to reintroduce his work as their own, he was long out of the picture.

The Canadian Government sold Canadair to Bombardier for a few pennies, including the airfield which was acres of prime land in Montreal. Bombardier used the sale of the land to buy interest in their long rival Lear. It was well choreographed.

To this day, I still have over my desk, an old water stained black and white drawing of Bill Lear's first mockup of the Challenger. It's a relec from the walls of the coal mine. Bill had discarded the design because he couldn't make it light enough to fly, but his pride wouldn't let him throw it away, so he gave it to Canadair. I wonder if the Lear family ever contemplates the irony of losing thier company to a set of plans Bill had discarded as utter trash.

Oh well, what goes around comes around.

AX
FTNWO

a reply to: eisegesis

As of April 2013, there were 270 aerospace companies in Mexico, 79% of which are manufacturing. Mexico has lured them in by being smart as hell. Lower wages played a role, but more importantly is the fact that one company started building a 75,000 square foot factory in March, and started working on aircraft in it in November.

The biggest lures in Mexico are the fact that unlike the US and Europe, there's no partner requirement there. Add to that, the companies control 100% of their product, and you have the perfect market for them. Mexico allows them to control how they work, and doesn't charge an export fee when they ship the aircraft out. Something that companies see as a huge benefit.

The people dont care about war and have become apathetic to its very need in my opinion.

Capitalism at its best, what we dont need is more weapons of war.

That our tax money goes into any of this crap is in my opinion the real tragedy.

We have enough nukes to destroy the entire world multiple times like were some kind of super villians out of comic books.

How about using that money to help in an effort to create world peace.

a reply to: Zaphod58

Mexico Is Going To Have High-Speed Rail Before Canada, And Bombardier May Build It

Slightly off-topic, but highly important to their future. More importantly, those workers might possibly have a job soon if their skills could transfer over.

A visit earlier this year to Bombardier's Mexican rolling stock manufacturing facilities left the analyst believing the company was well positioned to win the majority of nearly US$8 billion of contracts in the country.

About 70 per cent of Mexico's trains have been supplied by Bombardier and it is the only major manufacturer in the region with regional design, manufacturing and service operations, Spracklin said.

I guess work is never steady and the hire rate is demand driven only. Cheap labor and no union reps trying to rip your head off lets them roll with the punches.

a reply to: FormOfTheLord

Ok.....Except the Learjet is a private jet and has nothing to do with war, so your point is.........

a reply to: FormOfTheLord

A Learjet is a death dealing combat aircraft now?

a reply to: justwanttofly

Well there was a claim that a modified Learjet was used to fly people to the moon and orbit once upon a time, so why not.