Bombardier To End Learjet Production, Lay Off Workers

 - February 11, 2021, 9:35 AM
Bombardier's Learjet 75 Liberty variant just entered the market late last year, but production for the Learjet full line is coming to an end by the end of 2021 as part of a series of cost-cutting measures. But Bombardier has promised continued support, rolling out a new Racer remanufacturing program for the Learjet 40/45. (Photo: Curt Epstein)

The ramp-up in Global 7500 deliveries led to a 3 percent year-over-year growth in Bombardier’s business aircraft revenues to $5.6 billion, but the company is ending Learjet production by year-end, laying off 1,600 workers, and consolidating completions activity in Montreal as it grapples with the debt that it was left with after becoming a pure-play business aviation company.

Releasing 2020 results Thursday morning, Bombardier president and CEO Éric Martel said the decision to end production after a nearly 60-year history wasn’t taken lightly. Noting that more than 3,000 Learjets have been delivered since the brand first entered the market in 1963, he said, “The iconic Learjet has had a remarkable and lasting impact on business aviation.” However, he added, “Given the number of new entrants in the light jet segment and the challenging market dynamic, we need to focus our future efforts on our more profitable Global and Challenger aircraft families.”  

Late last year, Bombardier said it planned to announce aggressive steps to address its debt once it became a pure-play business aviation company following the sale of its rail business—its last non-business aviation unit—to Alstom. After the sale, Bombardier was left with a $4.7 billion debt load, slightly more than the $4.5 billion anticipated last year, and significantly more than the $2.5 billion originally expected. Bombardier cited lost order and delivery activity, restructuring, and other Covid-19 pandemic-related costs to the jump in debt.

Bombardier had already said that it did not plan to invest in new aircraft programs in the next several years. The measures announced on Thursday, Martel estimated, would help contribute to $400 million in annual savings by 2023. Savings this year are anticipated at $100 million. But the company will take a $50 million charge in restructuring costs.

The reduction in 1,600 positions will bring Bombardier's global workforce to about 13,000 by year-end. In addition to returning and consolidating Global aircraft completion work to Montreal, the company is reviewing options for underused hangar and industrial space in Quebec and divesting its electrical wiring interconnection systems in Queretaro, Mexico.

“Workforce reductions are always very difficult, and we regret seeing talented and dedicated employees leave the company for any reason,” said Martel. “But these reductions are absolutely necessary for us to rebuild our company while we continue to navigate through the pandemic.”

Bombardier stresses that it will continue supporting Learjet and announced a “Racer” remanufacturing program for Learjet 40 and 45 aircraft with a bundled set of enhancements that will be carried out in Wichita.

While ending completions and Learjet production work in Montreal, Bombardier will still use its expansive Wichita complex as a flight-test center and center of excellence for specialized aircraft. In addition, the service center will continue to operate.

In fact, Martel noted that services is one area where the company will still invest, and he pointed to growth activities in Singapore, London, Melbourne, and Miami.

As for results, Bombardier delivered 114 aircraft in 2020, down from 142 a year earlier. But revenues grew as Global 7500 deliveries ramped up in 2020, including a record 16 in the fourth quarter alone. Bombardier delivered 59 Globals during 2020, up from 54 in 2019; 44 Challengers, down from 76 in 2019; and 11 Learjets, down from 12 in 2019.

With the strong performance of the Global 7500, manufacturing operations alone in 2020 produced an 11 percent gain in revenues, offsetting a 21 percent slide on the services side. Service revenues of $988 million were affected by the decline in business jet utilization with the Covid-19 pandemic.

Martel was further encouraged by sales activity in the fourth quarter and said it was one of the strongest in years, with 43 gross orders. He further noted that pricing is headed in the right direction. In addition, he was encouraged by the newcomers to the market and said the company is keeping a close eye on how that will shape demand moving forward. Even so, he anticipates that 2021 deliveries will be roughly the same as 2020's at between 110 and 120 aircraft, and he noted that it will take the industry a few years to return to 2019 levels.