Bombardier cuts 2,500 jobs as private-jet demand slides

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 — falls amid a recession and feeble travel demand.

The cuts will see 1,500 layoffs in Quebec and 400 in Ontario, as well as 500 in Mexico, 40 in the United States and about 60 outside North America, according to a Bombardier spokesman. Half of the cuts will be completed by the end of the month, with the second half occurring throughout 2020.

The announcement Friday comes less than three months after Eric Martel took over as CEO from Alain Bellemare, under whose watch Bombardier moved to sell its commercial aircraft and rail divisions to prop up a balance sheet weighed down with billions in debt. The indefinite layoffs also come barely three weeks after thousands of furloughed Bombardier employees began to return to work, resuming production at factories shuttered due to coronavirus confinement measures.

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. “It is very unfortunate to have to resort to these reductions. However, we have reached the limits of our ability to maintain employment levels from before the COVID-19 crisis,” Coleal said.

In a statement Friday, Bombardier stressed the “extraordinary industry interruptions and challenges” caused by the pandemic, which have set off a forecasted 30% year-overyear decline in business jet deliveries industry-wide.

The union representing Bombardier machinists called the company’s decision “incomprehensible when Bombardier could have avoided this wave of layoffs by availing itself of the Canada Emergency Wage Subsidy.”

“We are extremely disappointed that Bombardier refuses to make the CEWS program accessible to all of its workers,” said David Chartrand, Quebec co-ordinator of the International Association of Machinists and Aerospace Workers.

A slashed workforce will lighten the overhead of a company grappling with share-price lows and credit downgrades and whose order book no longer supports a humming factory floor as clients rethink the value of a private-plane purchase in an economic downturn.

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.

Now Bombardier will reduce production of the luxury product — the Global 7500 is listed at $73 million US — by about 20%, according to forecasts by analyst Benoit Poirier of Desjardins Securities. “Those companies that acquire business jets do so when they have extra money to spend or they can make a business case for those private planes, and it’s more than likely that this year this kind of investment will be postponed until the future,” said Jacques Roy, a professor of transport management at HEC Montreal business school.

Longer-term demand might rise in step with wariness of the health risks associated with air travel, he said. “Companies will find it more convenient to fly their executives or six or seven engineers … on a private jet in North America.”

The company recently sold its commercial jet businesses, which supplied planes to airlines, and agreed to sell its rail business to French rail giant Alstom SA for $8.2 billion US, subject to approvals.