MONTREAL - Canada's only aircraft maker, Bombardier Aerospace says it is cutting 1,360 jobs, or about 4.5 per cent of its workforce to deal with a drop in orders for business jets.
Bombardier said Thursday the cuts come as the company decreases Learjet and Challenger production in response to flagging demand.
The Montreal-based company says it expects to face more challenges throughout 2009 amid weak market conditions.
The job cuts are expected to impact 1,010 temporary workers and about 350 permanent staff members.
Layoffs will take place at plants in Montreal, Wichita, Kan. and Belfast, Northern Ireland.
Bombardier says it hopes to offset the layoffs by hiring more than 800 permanent employees for some of its new aircraft projects.
"These are very challenging times," Guy Hachey, president and chief operating officer of Bombardier Aerospace, said in a release early Thursday.
"The decision to reduce our workforce was difficult to make and we fully recognize the impact it will have on our affected workers."
Hachey said the industry is facing "strong turbulence and we anticipate more volatility in the short term."
"The fundamentals of Bombardier Aerospace are solid, but we expect we will face more challenges this year. While the Corporation has taken significant steps to strengthen its operational and financial position over the last years, we must continue to be prudent and take decisive action."
The cuts at Bombardier follow a spate of recent job cuts across the Canadian economy as companies in various sectors cope with the recession and its squeeze on revenues and earnings.
Earlier this week, Canada's oldest company Hudson's Bay Co. said it's cutting 1,000 jobs in Canada, or about five per cent of its full-time workforce, as part of a corporate restructuring to improve efficiency and lower operating costs.
In recent months, forestry company Tembec, zinc and coal miner Teck-Cominco, newsprint giant AbitibiBowater, auto parts maker Magna International and many other companies have cut thousands of jobs as they brace for even tougher times ahead.
Analyst Benoit Poirier of Dejardins Securities, said Bombardier's cuts reflect current order weakness and the company could be forced to reduce output even more over the next year.
"The company expects its business jet deliveries to decrease by 10 per cent in fiscal year 2010, better than our forecast of a decrease of 23 per cent," Poirier said in a research note to clients.
"The company mentioned that it had received a "greater than usual level of deferrals and cancellations.' which will result in production cuts for its Learjet and Challenger aircraft, although no details were released. We believe further production cuts remain a possibility for (the 2010 fiscal year) and beyond."
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.
In the United States, companies have also shied away from buying corporate jets recently after public criticism that such spending would be inapropriate during a recession when tens of thousands of people are being laid off each month.
Last week, global aircraft giant Boeing Co. announced it plans to cut 10,000 jobs as the Chicago company faces weaker air traffic and pressure on military budgets.
Earlier, Cessna Aircraft Co., a maker of corporate jets, said it plans to lay off another 2,000 workers, about 13 per cent of its workforce, as the slumping worldwide economy forces more customers to cancel or delay orders for new aircraft.
In Thursday trading on the TSX, Bombardier shares fell 15 cents to $3.57, a drop of more than four per cent.
