June 5, 2020 by The Canadian Press
MONTREAL – Bombardier Inc. will cut 2,500 workers from its plane-making division as demand for the company’s main source of income – private jets – plummets amid a recession and falling travel demand.
Poised to take place throughout this year, the cuts will see 1,500 layoffs in Quebec and 400 in Ontario. Some 500 more are slated for Mexico, 40 in the United States, and about 60 outside North America, according to a Bombardier spokesman.
The announcement comes less than three months after Eric Martel took over as CEO from Alain Bellemare, under whose watch the plane-and-train maker moved to sell off its commercial aircraft and rail divisions to prop up a balance sheet weighed down with billions in debt.
The layoffs are permanent, Bombardier said.
Aviation division president David Coleal said “that if the market improves, we will assess measures to reintegrate our colleagues,” according to an internal memo obtained by The Canadian Press.
In a statement Friday, Bombardier stressed the “extraordinary industry interruptions and challenges caused by COVID-19,” which have prompted a forecasted 30 per cent year-over-year decline in business jet deliveries industry-wide.
The Montreal-based company, once the world’s third-largest aircraft manufacturer with a range of jet and turboprop aircraft, has pinned its future on business jets.
Bombardier recently sold its commercial jet businesses, which supplied planes to airlines, and agreed to sell its rail business to French rail giant Alstom SA, subject to approvals.
On Monday, it closed the sale of its CRJ regional jet program to Mitsubishi Heavy Industries Ltd. for US$550 million. A final vestige of its role in commercial plane-making departed with the sale of Bombardier’s remaining stake in the A220 commercial jetliner program to Airbus SE in February.
The business aircraft segment had initially expected double-digit revenue growth this year with 160 unit sales in 2020 amid a $16.3-billion backlog and had begun to ramp up production when the pandemic hit in March.
Bombardier said it expects to record a special charge of $40 million in 2020 as a result of the job cuts. Further information will be provided when it delivers its second-quarter financial results on Aug. 6.