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Bombardier ‘pauses’ Learjet 85 program, lays off 1,000

January 15, 2015

WICHITA, Kan. (AP) — Airplane maker Bombardier Inc. announced Thursday it will “pause” its Learjet 85 business jet program, cutting 1,000 jobs at its facilities in Kansas and Mexico.

Wichita, where the plane is built, is taking the brunt of the cutbacks with 620 jobs affected. The remaining job losses are in Queretaro, Mexico.

The Montreal-based company said the suspension of the program is due to weak demand for the plane and follows a downward revision of its business aircraft market forecast. It cited the continued weakness of the light aircraft market since the economic downturn.

Bombardier will take a $1.4 billion pretax charge in the fourth quarter, according to its news release.

“Bombardier constantly monitors its product strategy and development priorities,” said Pierre Beaudoin, Bombardier’s president and CEO. “Given the weakness of the market, we made the difficult decision to pause the Learjet 85 program at this time.”

The company contends the two affected plants remain “critical facilities” in key markets. It noted Wichita is the location of the final assembly for its Learjet 70 and Learjet 75 aircraft, the Bombardier Flight Test Center as well as a service center.

Bombardier employed just under 2,500 workers at its Wichita facility as of Dec. 31, Bombardier spokeswoman Isabelle Rondeau said.

The company said it had no timeline as to when it would resume production of the aircraft.

“We are going to monitor the market, of course, and see when it picks up,” Rondeau said. “But it is a pause — we really believe in that aircraft. It has great potential, but, of course, we will wait until we have a market increasing.”

But Richard Aboulafia, an aviation analyst with the Teal Group, called Bombardier’s contention that it was suspending the plane because of market conditions “utter nonsense,” noting that other business jet manufacturers are doing well. Part of the problem is that the Learjet 85 is a composite aircraft, rather than a metal one, and the business jet market does not necessarily reward composites.

In theory, planes made from composites are lighter and more fuel efficient, Aboulafia said, but there is also added market risk in working with new materials and the business jet market has been slow to accept them. Hawker Beechcraft at one time was the industry leader for them, and it too walked away from the market, he said.

In addition, Bombardier is also putting all their cash and taking a risk to enter a new market segment with its new C-Series jetliner, he noted.

“They have to devote a lot of resources to bring it to market — everything else gets sacrificed,” Aboulafia said

The latest layoffs follow a string of workforce reductions across the company in the past year. In July, Bombardier announced it was cutting 1,800 jobs worldwide as it restructures operations. And in January 2014 Bombardier announced a workforce reduction of about 1,700 employees and contractors at facilities in the United States and Canada, including 550 in Wichita at that time.

In 2012, the city of Wichita agreed to sell industrial revenue bonds and approved tax abatements to help the company diversify and expand, making way for its new Learjet 85. Bombardier’s $52.7 million expansion featured a flight test center, a center for engineering and information technology, as well as new facilities for paint and production flight testing and a new delivery center.

“We are certainly concerned for every job in Wichita, and we are going to work diligently to retain as many as we can,” machinists spokesman Bob Wood said after the layoff announcement. “If the plane starts selling again, then those jobs come back. That is what we bargained for.”

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