Bombardier says it’s going to cut about 1,000 employees from its Learjet business in 2015, affecting sites in Wichita and Mexico.
The Montreal-based company said Thursday the cuts are due to weak demand for the Learjet 85 business jet. The company said it was announcing a “pause of its Learjet 85” program.
Bombardier will also write down the value of its Learjet 85 program, resulting in a pretax charge of about $1.4 billion.
In Wichita, 620 jobs will be affected, Bombardier officials said. The layoffs were to begin immediately, officials said during a conference call Thursday morning.
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“Bombardier constantly monitors its product strategy and development priorities,” said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc. "Given the weakness of the market, we made the difficult decision to pause the Learjet 85 program at this time. We will focus our resources on our two other clean-sheet aircraft programs under development, CSeries and Global 7000/8000, for which we see tremendous market potential. Both programs are progressing well.”
During a conference call Thursday morning, officials said that the program could resume, if the market demand picks up. Calling it a good aircraft that has made for than 75 flight tests, officials said that they did not consider the pause a permanent shutdown for the Learjet 85.
The plane made its debut at the National Business Aviation Association's annual convention in Orlando, Fla., in October.
The world’s third-largest maker of commercial aircraft will also record $25 million for severance in its first quarter of 2015.
It also said it is updating its guidance for 2014, given that the company’s financial performance did not meet earlier expectations.
Bombardier said in a statement that earnings before financing expenses, financing income and income taxes (EBIT) before special items at Aerospace is expected to be approximately 4 percent, compared with a previous guidance of 5 percent. The variation is mainly due to increased provisions for credit and residual value guarantees, pricing pressure on new aircraft sold, as well as a decrease in fair value of used aircraft, according to the statement.
Bombardier says its operations in Wichita and Queretaro, Mexico, remain important to the company for both the Learjet and other types of aircraft that it makes.
The company launched the Learjet 85 in 2007. It had been set to enter service in 2013 but was beset by delays. Some analysts and aviation experts had wondered about the fate of the program, but as late as October, Bombardier executives said that the program was continuing.
The biggest customer for the Learjet 85 has been Flexjet, the former Bombardier-owned fractional operation.