Montréal, Canada, October 24, 2006 - Bombardier Aerospace announced today that it is adjusting its regional aircraft production rates to reflect current market demand. As a result, the production rate for its CRJ700/900 regional jets will be reduced. This will be partly offset by an increase in the Q400 turboprop production level in response to the growing need for this type of cost efficient regional airliner, which is ideally suited to short-haul routes. Bombardier will adjust its workforce level accordingly.
Total Bombardier aircraft deliveries for the current fiscal year 2006/07 are expected to remain at a similar level to that of last fiscal year 2005/06 (year ending January 31, 2006), but with a different product mix.
“We lead the regional aircraft market with 1,376 deliveries of our CRJ Series and 749 deliveries of our Q-Series regional aircraft, including more than 320 deliveries of our CRJ700/900 regional jets and over 350 deliveries of Q300/400 turboprop aircraft as of July 31, 2006. Recent orders for both our larger 90-passenger CRJ900 aircraft from Northwest Airlines and My Way Airlines and 70-seat Q400 aircraft from Frontier Airlines and Luxair demonstrate that we have the right products for operators looking to take advantage of our regional aircraft’s competitive operating economics,” said Pierre Beaudoin, President and Chief Operating Officer, Bombardier Aerospace.
“The restructuring of the airline industry continues, with relatively few orders for regional jets in the 70- to 90-seat jet category being awarded in recent years. This situation should improve as attested by the numerous sales campaigns we are actively pursuing. However, we must be prudent and manage proactively our CRJ700/900 jets production schedule in the short term to ensure we achieve our goal of increased profitability and our success in the long term. This means making difficult but necessary decisions. We recognize the impact this decision will have on our affected employees and we will treat them fairly and with respect,” Mr. Beaudoin added.
The production rates will be adjusted as follows:
Impact on manpower
By the end of the current fiscal year 2006/07, the workforce level at Bombardier’s Toronto facility where the Q-Series and Global aircraft are manufactured will have risen by over 800 employees to reflect the increase in production levels.
However, we expect that the adjustment in the CRJ700/900 regional jets production rate will result in a workforce reduction of approximately 1,330 employees, including management, at its Montréal-area facilities and at its Belfast site over a nine-month period starting October 2006.
Total Bombardier Aerospace employment as of July 2006 was approximately 26,900. The overall workforce level has remained at a similar level since January 2004.
Severance costs associated with the layoffs will total approximately $31 million US and the majority of these costs will be expensed through the normal course of operations in the third quarter of the current fiscal year 2006/07 (year ending January 31, 2007).
While the order level for larger regional jets is still challenging, the order book for turboprops is growing. Furthermore, orders and deliveries of business aircraft continue to rise year over year. Bombardier is ideally positioned in corporate aviation, with the broadest and most modern line-up of business aircraft to meet strong demand in North America and Europe and growing interest in the Asia-Pacific region. According to the latest General Aviation Manufacturer Association (GAMA) figures for the first half of 2006, Bombardier is a leader with 30 per cent of all business jet deliveries.
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