Despite New Orders, Bombardier makes more cuts

 - January 29, 2007, 5:24 AM

Bombardier announced plans to cut this year’s CRJ200 production by another 20 percent just days after Standard & Poor’s lowered the company’s credit rating to junk status and issued a “negative” outlook for Bombardier’s regional jet prospects. S&P said it had lowered its ratings for the group by two notches from the weakest investment grade of BBB- to the speculative grade of BB, a change that could increase Bombardier’s borrowing costs.

The announcements came just days after Northwest Airlines converted options on ten 50-seat CRJ200s for assignment to code-share partner Pinnacle Airlines and Austria’s Styrian Spirit signed a firm order for a single 70-seat CRJ700.

Only two months earlier Bombardier announced a 25-percent cut in CRJ200 deliveries next year and canceled plans to boost CRJ700 and CRJ900 production. The cuts will see CRJ200 deliveries fall from 98 to 54 during Bombardier’s next fiscal year, which starts on January 31. As plans stand today, CRJ700/ 900 production will remain at one every four days.

Bombardier reiterated, however, that a strengthening business jet sector will mitigate any need for more employment cuts at the aerospace division.

In October the company said it would slash some 2,000 jobs at Belfast, Northern Ireland, and Dorval, Mirabel and St. Laurent, Canada, to align the work force with reduced production. However, if Delta Air Lines–one of Bombardier’s biggest customers–defers CRJ deliveries, the manufacturer may have to lay off another 1,200 workers, it said.