MONTREAL: Canadian manufacturer Bombardier today suspended its Learjet 85 business jet program due to "weak market demand," laying off 1,000 employees in Mexico and the United States.
The company will also take a USD 1.4 billion special charge in sunk development costs related to the jet in its fiscal fourth quarter, and revised downward its financial guidance for the year.
The company's stock fell more than 25 per cent to 3.03 Canadian dollars in morning trading in Toronto following the announcement.
"The pause is due to weak demand for the Learjet 85 aircraft," the company said in a statement.
"This reflects the continued weakness of the light aircraft category since the economic downturn."
The new six- to eight-seat Learjet 85, built of composite materials in order to boost fuel efficiency, had been set to compete with Dassault's new Falcon 5x business jet and the US luxury Gulfstream.
The world's third largest aircraft manufacturer said it will continue making its slightly smaller Learjet 70 and 75 models.
But its main focus going forward will be on medium-sized passenger aircraft -- the CSeries and the Global 7000/8000.
The 100 to 150 seat medium-range CSeries is Bombardier's entry into airspace dominated by Airbus and Boeing.
The job cuts will hit Bombardier's plants in Queretaro, Mexico, and Wichita, United States. These follow previously announced cuts of 1,700 in December 2013 and more than 1,800 last July as the company struggles to restructure its aerospace division.
The latest action also comes after the company on Monday announced a 19 per cent drop in orders last year.
Its cash flow is expected to be nearly halved to USD 800 million, and its profitability reduced, it said today. It is scheduled to report its fourth quarter results mid-February.
Following a review of these preliminary results, the company said "it has become clear that certain financial guidance previously provided will not be met."
However, Bombardier said it exceeded its schedule for deliveries of 290 aircraft last year (204 business, 84 commercial and two amphibious aircraft) and remains optimistic.