The transport engineering giant Bombardier has admitted that demand from the world’s super-rich for its luxurious new Learjet has been so bad that it is halting the whole project. Some analysts said the decision cast doubt over the future of the whole Learjet aviation brand.
Bombardier shares tumbled 26 per cent on the news that it was shelving the Learjet 85 and slashing 1,000 jobs in Mexico and the US.
At $21m (£13.8m) apiece, the eight-passenger jet was not at the super-premium end of the market: Bombardier’s Challenger and Global ranges have that covered, costing as much as $70m.
But it was to be the largest and longest-range Learjet model, and shelving it is seen as a huge humiliation for the company.
Bombardier, which is based in Canada but famed in the UK for its train operations in Derby, said the decision would mean a $1.4bn charge in the company’s accounts on the value of the project’s development costs. Redundancies will cost a further $25m.
Bombardier described the shelving of the project as a “pause”. But given the size of the charge it is taking to its accounts, analysts said it sounded far more serious.
“This suggests to me a longer than typical delay. This appears to be an indefinite pause,” said Cam Doerksen, an analyst at National Bank of Canada.
The company blamed the lack of interest from potential customers as being due to “the continued weakness of the light aircraft category since the economic downturn”.
However, analysts pointed out that the Learjet 85 had been dogged by production delays since development started in 2007.
The Learjet problems come after Bombardier has suffered multiple setbacks in its aerospace division. It cut 3,500 jobs last year after postponing another of its planes, the C Series – a 150-seat rival to the smallest jets from Airbus and Boeing.
Many of the job losses from yesterday’s announcement will be in Wichita, Kansas, where Learjet was established in 1962 as one of the first luxury private jet specialists.
The 85 model had been seen as the future of the company, enabling customers to fly across the Atlantic in its innovative carbon-fibre composite design.
But delays to its 2013 production target led to concerns in the aviation market that all was not well for the company’s first composite structured jet. Then, in mid-2014, Learjet head Ralph Acs was moved from the division and left Bombardier soon after.
The Learjet 85 in Numbers
£14m The cost of a single plane, seating eight passengers
1,000 Jobs cut by Bombardier in Mexico and the US
625 The top speed, in miles per hour, of the Learjet 85Reuse content