February 5, 2009 / 2:42 PM / 9 years ago

UPDATE 3-Aerospace turbulence leads to Bombardier job cuts

* Bombardier Aerospace to cut 1,360 jobs

* Sees business jet orders dropping 10 percent

* Commercial orders to rise 10 percent

* Stock down 3 percent in Toronto (Adds details, analysts’ comments)

By John McCrank and Scott Anderson

TORONTO, Feb 5 (Reuters) - Bombardier Inc’s (BBDb.TO) aerospace unit plans to cut more than 1,300 jobs in response to a softening market for business jets, the company said on Thursday.

The Montreal-based company said the 1,010 temporary workers and subcontractors and 350 permanent positions to be cut represent about 4.5 percent of its 30,000 worldwide workforce. Severance costs are expected to come in under C$5 million ($4.1 million).

The cuts to unionized, salaried and management workers, will take place at facilities in Montreal, Wichita, Kansas, and Belfast, Northern Ireland, over a five-month period, beginning this month.

The layoffs come as the company braces for a slowdown in orders for its Learjet and Challenger aircraft.

“The industry is experiencing strong turbulence, and we anticipate more volatility in the short term,” Guy Hachey, Bombardier Aerospace’s chief operating officer, said in a release.

“The fundamentals of Bombardier Aerospace are solid, but we expect we will face more challenges this year.”

In the latest fiscal year, Bombardier delivered 239 business jets, up from 232 in the previous year.

But that was lower than many analysts had expected. Benoit Poirier, an analyst at Desjardins Securities, said he had been expecting 254 business jet deliveries. He said the lower number implies significant cancellations in the last quarter.

Bombardier now expects business jet orders to fall by 10 percent in fiscal 2010, which began in January, due to a higher than usual number of deferrals and cancellations.

That forecast was rosier than some analysts had expected.

“We thought they would be down 12 percent or so, but they are saying deliveries of business jets will be down 10 percent.” said Jacques Kavafian, an analyst Research Capital.

Analysts at Desjardins Securities had forecast a 23 percent drop in business jet orders this year, and said further production cuts remain a possibility.

The slump in business jet orders comes as companies around the world look to slash their budgets and eliminate luxuries as the downturn in the economy deepens.

Last month, struggling Nortel Networks Corp NT.TO grounded its corporate jet as the telecom equipment maker cuts costs and restructures under court protection.

Bombardier said the softness in business jet market could be offset by an expected 10 percent rise in orders for commercial aircraft, led by an increase in demand for its 78-seat Q400 turboprop.

The commercial aircraft division delivered 110 planes, down from 128 the previous year.

Bombardier shares were down 3 percent at C$3.61 on Toronto Stock Exchange around midday.

Dundee Capital Markets and Desjardins Securities both maintained price targets of C$7.00 for the stock, with “buy” ratings. Versant Partners Research kept its price target for Bombardier at C$4.50, with a “neutral” rating.

$1=$1.23 Canadian Editing by Rob Wilson

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