Company Cites Lower Demand For CRJs

As Boeing and Airbus (and their respective governments) slug it out over government subsidies, the world's third-biggest maker of commercial aircraft is laying off 2,000 workers and cutting production.

Montreal-based Bombardier says it will reduce 2005 production by 18 percent, down to 145 aircraft in the fiscal year that starts February 1st. It will spend $26 million in laying off the 2,000 workers, and says it may lay off another 1,200 if Delta Airlines files for bankruptcy.

Delta's financial woes, combined by US Airways' second bankruptcy, have put a hurt-lock on Bombardier and CEO Paul Tellier.

"He will be able to turn the company around eventually, but it's taking more time than originally thought because of the environment for the airline industry," Jackee Pratt, fund manager for Mavrix Fund Management in Toronto told Bloomberg News. Pratt's company has already divested itself of Bombardier shares.

The pink slips will reportedly be handed out at Bombardier's plants in both Montreal and Belfast over a period of nine months beginning in November. The $26 million expenditure related to the layoffs will come in the form of severance costs.

FMI: www.aerospace.bombardier.com