1,700 Lose Jobs at Canadian Aeronautics Company Bombardier
Some 1,700 employees from the aerospace division of Canadian aeronautics company Bombardier are bound to lose their jobs in the coming weeks.
The layoffs form part of cost -utting measures to keep the company afloat, following the delays in the arrival of its two new aircraft as well as the toughening market conditions of both commercial and business planes.
The jobs slash will involve 1,100 in Canada, mostly at Montreal area plants in St-Laurent, Dorval and Mirabel, and 600 in the U.S., corresponding to 4.4 per cent of Bombardier's entire workforce.
It remains unknown when the layoffs will exactly begin. The development was announced to the employees through an internal memo.
"Stricter controls over spending must be implemented to ensure we consistently meet our budget throughout 2014. These controls will help offset the significant investments we are making in our new product development programs, such as the CSeries, Learjet 85, Global 7000 and Global 8000 aircraft programs, as well as improvements to our facilities," the memo said.
"This is a decision, a very difficult decision we had to make in order to protect our business in the long term," Annie Cossette, company spokeswoman, said.
Just on Monday, the airplane maker revealed a 19 per cent drop in orders posted in 2013. While last week, Bombardier announced the launch of its hotly-anticipated CSeries aircraft will be moved to another year because the equipment needs more testing time.
"There's definitely reason to be concerned," Scott Rattee, Stonecap Securities analyst, told Reuters. "The layoffs confirm ... they are very concerned about their cash position."
Analysts fear the delay would translate to higher development costs that could further dampen company financial alleviation methods.
"Each year of delay could increase the development costs of the program by $1 billion," Kristine Liwag, an analyst with the Royal Bank of Canada, was quoted by the AFP. She noted the price has now reached $5.5 billion.
Stocks of the company were down on Tuesday, 3 per cent to C$3.98.