Bombardier Inc. will cut 2,500 jobs from its aviation division, the company announced on Friday, as demand for business jets plummets due to the coronavirus pandemic.
The Montreal-based company said in a news release that it will “adjust its workforce to align with current market conditions”, which have been massively disrupted by the COVID-19 pandemic.
“With business jet deliveries, industry-wide, forecasted to be down approximately 30 per cent year-over-year due to the pandemic, Bombardier must adjust its operations and workforce to ensure that it emerges from the current crisis on solid footing,” the company said.
Bombardier said the approximately 2,500 layoffs will impact workers at its manufacturing facilities, including 1,500 employees in Quebec and 400 in Ontario. Another 500 cuts will be in Mexico, 40 in the U.S. and 40 at other “worldwide” facilities. The job cuts will occur throughout 2020.
The company’s stock was down 1 per cent as of 11:45 pm ET, trading at 48 cents per share on the Toronto Stock Exchange.
The layoffs come two months after Eric Martel stepped into the role of chief executive of the company. Martel replaced Alain Bellemare, who first joined Bombardier in 2015 and deployed a turnaround plan that has resulted in a drastically smaller company focused on its private jet business.
Bombardier finalized the sale of its its commercial aviation division earlier this year, and has agreed to sell its rail business to France’s Alstom. The deal is expected to close next year, provided regulatory authorities in Europe approve it.
RBC Capital Markets analyst Walter Spracklin said in a note to clients on Friday that Bombardier’s decision marks “the first indication from the company quantifying the magnitude of declines.” Spracklin expected a 31 per cent demand decline in the business jet market.
“Overall, while the decision to reduce headcount likely indicates a more challenging operational environment in (business aviation), we do not view the news as overly surprising,” Spracklin wrote.
Bombardier said it expects to record a $40 million charge as a result of the job cuts. More information will be provided when the company reports its second quarter financial results on Aug. 6.