Montreal — Bombardier Inc.'s famed aerospace business is facing severe headwinds, prompting the company to scale back production more rapidly than previously planned.
The company that pioneered the regional jet and helped reshape the commercial aviation market is suffering as U.S. airlines retrench due to a slowdown in customer traffic. But the latest round of layoffs at Bombardier's Montreal plant also highlights another factor – that new overseas rivals are jostling for a bigger piece of a regional jet market that is shrinking.
Bombardier said it will reduce production of its line of regional jets after failing to clinch new orders from airlines, a move that will cost another 715 jobs in Quebec. That brings the number of job cuts worldwide at the company's aerospace division to more than 5,000 this year.
Bombardier officials insist that the regional jet market – aircraft in the 60- to 99-seat range – still has strong growth potential. But some analysts question whether the market can bounce back to its prerecession levels any time soon.
“What's troubling is that, unlike all the other aerospace markets, it's difficult to see any long-term growth drivers in the regional jet segment,” says Richard Aboulafia of U.S.-based Teal Group Corp.
Regional jet use by airlines has peaked as carriers shift to roomier, more fuel-efficient, bigger planes, Mr. Aboulafia said.
Added to that trend is the emergence of three relatively new entrants – in addition to established rival Embraer SA – scrambling for a piece of the regional jet market.
Bombardier is faced with the need to manage a slow decline of a segment it once dominated, Mr. Aboulafia said . “Regional jets are not the happiest story in the business.”
Executives at Bombardier believe that a robust market awaits once the recovery takes hold; the company is forecasting global industry-wide sales of 5,800 new regional jets over the next 20 years.
“This is not at all the death of the CRJ,” said Bombardier Aerospace spokesman Marc Duchesne, referring to Bombardier's regional-jet brand name. The company has delivered more than 1,500 regional jets since the inception of the program about 20 years ago.
The new players providing added competition are Sukhoi Civil Aircraft Co. of Russia, Japan's Mitsubushi Heavy Industries Ltd. and China Aviation Industry Corp. (AVIC I). But all makers of regional jets are facing the same trend: there has been a blurring of the line between regional jets and full-size jets as demand shifts to planes in the 100-seat-plus category.
In fact, Bombardier itself is betting big on future growth coming from its new C Series family of 110-to 130-seat long-range commercial jets, which will nudge the company into airspace now occupied by giants Boeing Co. and Airbus SAS.
Bombardier and Brazilian archrival Embraer have also introduced roomier, larger versions of their regional jets.
Bombardier Aerospace spokeswoman Hélène Gagnon said Bombardier is confident it can maintain its dominant position in the regional jet market, thanks in part to continued efforts to add innovative and efficiency-improving features to its existing models.
“We think we're going to come out of this recession stronger than ever,” she said.
