MONTREAL/TORONTO (Reuters) - Bombardier Inc said Thursday it plans to cut 1,750 jobs in its business-jet division, about 15 percent of jobs in that unit, due to weaker demand, in the latest setback for the Canadian train and aircraft maker.
The company said last week it would cut production of Global jets, its largest business aircraft, after orders plummeted.
“Economic conditions and geopolitical issues in some market regions, such as Latin America, China and Russia, have impacted order intake levels industrywide,” the company said.
The cuts represent about 2.5 percent of the company’s staff worldwide.
Bombardier’s commercial aircraft business has been in the spotlight as it has struggled to bring its new CSeries jet into service. Business aircraft are the profitable core of the aerospace business, earning $96 million before interest and taxes in the first quarter, up 7 percent from a year earlier, while the commercial aircraft business lost $9 million.
Net business aircraft orders dropped to 19 from 46 a year earlier in the first quarter, with weakness in the Global program, according to Chief Executive Officer Alain Bellemare.
Separately, in January, the company suspended development of its new Learjet 85 on weak demand, and cut 1,000 jobs.
Bombardier is developing successors to the Global 5000/6000, the Global 7000/8000. A test plane is in production, and Bellemare has said the order book is “very strong,” but it wasn’t clear when the planes will go into service.
Bombardier said the job reductions will begin in June and continue through the first quarter of 2016. About 1,750 employees - up to 1,000 in the Montréal region, up to 480 in Toronto and up to 280 in Belfast - will be affected. Bombardier has nearly 70,000 employees, including about 11,600 in its business aircraft unit.
Supplier Honeywell has forecast that new business jet deliveries will be up “modestly” this year.
Larger jets like the Global have been the strongest part of the market recently, but on a conference call last week, Bellemare noted Bombardier’s “significant presence” in Russia, China and Latin America.
Russia is in recession, and the ruble lost almost half its value last year after oil prices tumbled and the West imposed sanctions, hitting spending on luxury goods. Meanwhile, China’s economy is losing momentum and major Latin American markets like Brazil have been turbulent.
Shares were down 1.9 percent at C$2.55 in morning trading on the Toronto Stock Exchange.
With additional reporting by Euan Rocha in Toronto; Editing by Jeffrey Hodgson and Bernadette Baum