Bombardier posts higher profit, cuts more jobs

Montreal-based Bombardier has reported better-than-expected financial results for the fourth quarter, which comes on the heels of an announcement that the manufacturing giant will cut 3,000 more jobs in Canada, Ireland, the U.S. and Mexico at the end of 2009.

This latest manpower reduction is in addition to the 1,360 layoffs announced Feb. 5 when Bombardier adjusted the production rates of its Learjet and Challenger aircraft. Severance costs associated with these layoffs are expected to total approximately $30 million.

Financially, Bombardier earned $309 million, or 17 cents a share, in the quarter ended Jan. 31, up sharply from $218 million, or 12 cents a share, an increase driven largely by lower taxes. Revenue rose to $5.4 billion from $5.3 billion.

The group registered 367 net orders for business, commercial and amphibious aircraft, compared to 698 aircraft last fiscal year. Deliveries totaled 349 aircraft versus 361 last year. In the business aircraft market, Bombardier Aerospace maintained its leadership, on a revenue basis, with 235 deliveries as well as 251 net orders; commercial aircraft net orders totaled 114 aircraft, while 110 aircraft were delivered.

Although Bombardier Aerospace has the most comprehensive product line of all business aircraft manufacturers, business aircraft demand has deteriorated rapidly during the second half of calendar 2008 and is expected to remain weak for the foreseeable future. As a result, Bombardier Aerospace now expects to deliver approximately 25 percent less business aircraft this fiscal year compared to fiscal year 2009, while still expecting to increase deliveries of its commercial aircraft by 10 percent compared to last fiscal year.

Bombardier is revising downward all of its business and regional jets production rates and implementing measures to meet the continuing challenges facing the aviation industry. However, the company is well positioned in the regional jet and turboprop categories due to the economic advantage of its products, a large installed customer base and family commonality benefits across the CRJ and the Q-Series aircraft. While the production level for the Q400 turboprop has been increased as demand for this aircraft remains strong, the production rate for the CRJ NextGen regional jets will be reduced in the latter part of fiscal year 2010 to adjust for a slowdown in new orders and deferral requests by some customers.