Bombardier cuts 3,000 jobs worldwide despite profit increases

MONTREAL - Bombardier Inc. is prepared to cut more jobs if its markets weaken further, Canada's largest aircraft maker said after slashing 3,000 jobs around the world to cope with weakening demand for business jets.
"Hopefully the market will pick up, but if action is required we will take decisive action," Guy Hachey, chief operating officer of Bombardier Aerospace, said during a conference call with analysts and the media Thursday.
The cuts came as Bombardier reported increased profits and revenues for its fourth quarter and financial year. Bombardier earned US$1 billion in annual profits last year for the first time in its history.
The job losses affect about 1,500 workers in Canada and reflect Bombardier's move to cut production of business jets in anticipation of a 25 per cent drop in deliveries this year, well above its 10 per cent target made in February.
Companies in the automotive, machinery, forestry and aircraft sectors have cut thousands of jobs in the last 18 months as the recession squeezes demand for their products from the key United States market and customers around the world.
The global aircraft sector has been hit hard by the recession, which has squeezed jet orders from major airlines. As well, the market for corporate jets has been hurt by the economic slump and the credit crunch, which has made it more expensive for companies to finance the purchase of corporate jets.
"It's very hard to predict exactly where the market is going in the long-term but we hope that we're done with layoffs for this year," Hachey said.
In Canada, the company operates major aircraft assembly operations in suburban Toronto and Montreal.
The Montreal plant will be hardest hit as 1,030 jobs will be cut. That's in addition to 710 announced in February. Toronto will shed 475 jobs, Belfast 975, the United States 470 and Mexico 50.
Employees said the layoffs don't come as a great surprise.
"We are disappointed but it would be crazy to say that we didn't see it coming since there are planes parked in the rear courtyard and we see that people aren't coming to pick them up," said Dave Chartrand, president of the International Association of Machinists and Aerospace Workers.
The announcement Thursday affects about 10 per cent of Bombardier's aerospace workforce and comes less than two months after the company cut 1,360 aerospace jobs in response to waning demand for its Learjet and Challenger aircraft.
The total head count reduction of 4,400 represents 14 per cent of its 32,500 aerospace workers. Bombardier Transportation also employs 34,200 people around the world.
However, the Montreal company is also hiring hundreds of workers for its new CSeries and other new aircraft programs. Some of these jobs in its completion centre and for engineering could be filled by workers who face layoff.
Hardest hit will be production of smaller, narrow body business jets that been most affected by the economic slide. However, unlike the February layoffs, it will also affect Challenger, Global Express and CRJ regional jet production.
Hachey said the company may seek to boost productivity by merging some production lines.
CEO Pierre Beaudoin Beaudoin said the company will meet with employees and unions to determine if some layoffs can be averted through early retirements or other efforts.Analyst Cam Doerksen of Versant Partners said Bombardier's decision to further cut aircraft production reflects the reality in the marketplace.
He expects a further 20 per cent reduction in deliveries from fiscal 2009 next year, but that won't necessarily mean more layoffs.
In its financial report, Bombardier (TSX:BBD.B) generated net income of US$309 million, or 17 cents per share for the quarter ended Jan. 31, up from year-earlier profits of $218 million or 12 cents per share.
The company, which reports in U.S. dollars, said the increase in net earnings was due largely to lower income tax rates throughout the quarter and full fiscal year.
Quarterly revenue edged up to $5.4 billion from $5.3 billion recorded during the same quarter the year before.Bombardier's class B shares rose 33 cents to $3.37, a gain of 10.86 per cent, on the Toronto Stock Exchange.