More Cuts for Bombardier, Embraer

 - December 18, 2007, 7:56 AM

Both Bombardier and Embraer announced cuts in regional jet production that will see next year’s CRJ200 output fall by 25 percent and total Embraer RJ deliveries by some 9 percent this year and 15 percent next year. Bombardier also suspended plans to boost production of CRJ700s and CRJ900s, striking a particularly hard blow for workers at Bombardier’s Belfast plant, where 560 will lose their jobs as earlier increases in CRJ700 fuselage production revert to the original rate. Another 1,400 layoffs will occur at Dorval, Mirabel and St. Laurent. The cuts will not affect Downsview, where Q400 and Q300 turboprop production has stabilized with a recent surge in sales. Embraer does not expect its cuts to affect employment rolls.

As plans stand today, CRJ200 rates will fall to 68, while CRJ700/900 production remains at one every four days, or 77 for the fiscal year starting January 31. Embraer jet production will fall to 145 from a planned 160 this year and a projected total of 170 next year.

The reasons for the Embraer cuts became clear when US Airways suspended deliveries of its order for 85 Embraer 170s last month at 22 and American Airlines canceled deliveries of the final 18 ERJ 145s on order for American Eagle. The wholly owned AA subsidiary planned to take those deliveries from next July to February 2006. As of late last month it had taken delivery of 58 airplanes. It now holds delivery positions on another 30.

Although some two months ago Bombardier president and CEO Paul Tellier promised no cuts this year, he warned about negative longer-term prospects, including the possibility of delivery deferrals by Delta Air Lines. If Delta has to suspend deliveries, Bombardier expects it will need to lay off another 1,200 workers.