Learjet series to cease production by year end

Yves Le Marquand

Bombardier is to cease production of the Learjet series by the end of 2021, after over 55 years of flying and more than 3000 deliveries. The end of the series also means the loss of 1,600 jobs as part of a drive to save $400m annually by 2023. “This is a decision we did not take lightly,” said Bombardier chief executive Eric Martel.

Since its debut in 1963 the Learjet “has had a remarkable and lasting impact on business aviation”, said Martel. “The product has a lot of competition. This is not a market segment that brings profitability right now. We are basically saying: ‘Let’s focus on where we are having leading products and where basically we believe the margin will be better.”

Bombardier’s Wichita facility – Learjet’s home – will continue as the company’s main flight-test centre and part of its global services network. The Canadian OEM said it will fully support the Learjet fleet “well into the future”.

Brian Foley, founder, Brian Foley Associates told Corporate Jet Investor he was not surprised to see the news. Foley said the market has spoken for the series. Whilst annual deliveries in recent years haven’t topped a dozen, rival aircraft like the Phenom 300 have delivered over 50 in the same period. “The competitors easily outpace the 75 and the Liberty volume.”

“Basically, when Bombardier ran into financial difficulties it threw a red flag for the Learjet programme. Principally because in the range of products the Learjet delivers substantially lower revenue,” said Foley.

“Another piece of writing on the wall was the cancellation of the 85 programme two years ago. To me that was an indication that the company wasn’t interested in moving that division forward.”

Bombardier gave the Learjet decision at its fourth-quarter results announcement. Net loss for the period was $337m, down from $1.72bn in 2019.

Free cash flow generation in the latest quarter was $523m. Earnings before interest, taxes, depreciation and amortisation (EBITDA) in 2021 will likely rise above $500m, said Bombardier and free cash flow burn is also expected to be above $500m. Debt reduction will play a significant part in improving cash flow generation, noted Martel.

Bombardier said it expects to end 2021 with a workforce of 13,000. It had around 16,000 employees at the end of 2020. Martel said: “Headcount reductions are always very difficult. But these reductions are absolutely necessary for us to rebuild our company while we continue to navigate through the pandemic.”

According to Martel, business-jet flight activity globally at year end was about 87% of pre-Covid levels. Pending no major setbacks, it will likely take a few years for the industry to return to 2019 delivery levels, he added. In 2019, Bombardier delivered 142 business jets. By contrast, Bombardier expects to deliver 110 to 120 business aircraft in 2021, no increase on the 114 delivered in 2020.

Meanwhile, the Liberty Learjet 75 is the subject of our First Look feature in the next edition of Corporate Jet Investor Quarterly. Reserve your free copy here.

 

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