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Bombardier cuts 1,700 jobs after CSeries delay

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MONTREAL: Canadian aeronautics company Bombardier said it is eliminating 1,700 jobs in Canada and the US, only days after announcing it would delay the launch of its CSeries aircraft.
Some 1,100 jobs in the Montreal region and 600 at a factory in the US state of Kansas will be cut, amounting to 4.4 percent of Bombardier’s workforce.
A company spokeswoman said the jobs slated for elimination include 300 cut in December.
Before the layoff Bombardier employed some 38,350 people in its aeronautic branch.
The action comes after the company on Monday announced a 19 percent drop in orders last year.
In addition, the manufacturer announced last week a one-year delay in the launch of its hotly-anticipated CSeries aircraft, saying it needs more testing.
The launch of the 100-125 seat CS100 now has been pushed to the second half of 2015, followed by deliveries of the slightly roomier CS300 some six months later.
The delay results in an increase in program costs for the new aircraft, necessitating the layoffs.
Development costs for the series were initially estimated at US $3.4 billion.
But, according to Kristine Liwag, an analyst with the Royal Bank of Canada, “each year of delay could increase the development costs of the program by $1 billion,” with the price now approaching $5.5 billion.
Walter Spracklin, also of the Royal Bank, said that the program’s risk will now be difficult to absorb. Assuming a price of $50 million per aircraft and a profit margin of 10 percent, Bombardier “will need to sell over 800 aircraft to break even.”
Only 198 CSeries aircrafts have been ordered from 17 client companies, Bombardier said a week ago.
Bombardier’s spokeswoman said that cuts affect all employees from engineers and designers to assembly line employees and commercial service workers.
Around 3,000 employees, including 800 engineers, were assigned to the CSeries program.