WICHITA, Kan. — Bombardier Inc. said Wednesday it will reduce its global workforce by 7,000 people over the next two years.
The Montreal-based parent of Learjet said most of the cuts will be in Canada and Europe. But the action also will affect 220 people in Wichita, a Bombardier spokeswoman said, over the same two-year period.
Bombardier employs 1,850 people at its plant on the west side of Wichita Eisenhower National Airport.
That announcement of job cuts came as part of the plane and train maker’s year-end 2015 earnings, in which the company saw lower revenue last year, $18.2 billion, compared with $20.1 billion in 2014. Its adjusted net income for 2015 was $326 million, down by nearly half of the $648 million it reported in 2014.
The affected positions will be both production and non-production, and in the company’s train and plane units. Of the 7,000 positions to be cut, 2,000 of them will be contractors, Bombardier said.
Bombardier’s top executive said the job cuts are “difficult” but necessary for the company, which for the past several years has struggled with delays and rising costs on its new C Series airliner program. In the past year, the company has pushed back the entry-into-service of its Global 7000 business jet, canceled its Learjet 85 program that resulted in a $1.2 billion charge, and watched demand fall for its Global 5000 and 6000 business jets especially in Russia, the Middle East and China.
“We’re taking this difficult decision to make Bombardier stronger,” Alain Bellemare, Bombardier president and CEO, said on a conference call Wednesday morning with financial analysts.
Bellemare said three factors are leading Bombardier to reduce its global workforce to 64,000 people.
“We are adjusting business aircraft volume to be in line with market demand,” he said.
Also, major development programs and projects such as the C Series and in its train unit are “ramping down,” prompting the “resizing of the workforce to match future workloads.”
And Bombardier needs to be more efficient in producing its planes and trains.
We “need to increase our productivity across all sectors,” Bellemare said, “to regain earnings power . and paying down debt starting in 2018.”
Bombardier delivered five fewer business jets between 2015 and 2014: 199 compared with 204, respectively.
As a result, its Bombardier Business Aircraft unit saw 2015 revenue slip from $7.2 billion in 2014 to $6.9 billion in 2015.
Those delivery totals included its large-cabin Globals, Challengers and Wichita-built Learjets. It did not break out deliveries for each model and type.
The business aircraft backlog at the end of 2015 stood at $17.2 billion, compared with $24 billion in 2014.
One of several special charges that Bombardier recorded in 2015 was a $296 million non-cash charge that chief financial officer John Di Bert said on the call was related to its CRJ1000 regional jet and Learjet. The bulk of that charge, $243 million, came from low firm orders and backlog on the CRJ1000.
“We remain committed to these programs and will continue to market the aircraft aggressively,” Di Bert said.
Bombardier is currently producing two Learjet models in Wichita: the Learjet 70 and the Learjet 75.
Bombardier said it expects business jet deliveries in 2016 to total 150 aircraft, a 25 percent decrease from 2015.
“We believe that our production rates are properly adjusted with market conditions,” Di Bert said.
Of Bombardier’s five business units — aerostructures and engineering; business aircraft; commercial aircraft; product development engineering; and transportation – business aircraft will see the fewest job cuts from Wednesday’s announced workforce reductions, totaling 500 people.
If there was a bright spot to Bombardier’s earnings announcement Wednesday, it was Air Canada.
The airline, Bombardier said, signed a letter of intent to purchase 45 CS 300 airliners with an option for 30 more.
Bellemare said the Air Canada order, combined with an order from “a major international airline” serving Europe and Asia, has brought Bombardier’s C Series orders and commitments to 678 aircraft.
Bellemare said Bombardier remains on track to deliver its first CS100 airliner to launch customer Swiss International Airlines in mid-2016.
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