Bombardier has taken a $1.4 billion impairment charge after deciding to "pause" its Learjet 85 programme due to continued weak demand in the light jet sector.
The write-off will be recorded as a pre-tax special charge in fourth-quarter results scheduled for release by the Canadian airframer on 12 February.
Bombardier also will further reduce its workforce by 1,000 employees, with the job cuts focused on Learjet 85 manufacturing sites in Queretaro, Mexico, and Wichita, Kansas.
The all-composite Learjet 85 was launched in 2008 with plans for service entry by the end of 2013. Bombardier blamed schedule delays initially on problems with certificating the design and manufacturing of the business jet's all-composite structure.
Finally, Bombardier lowered 2014 guidance by one percentage point for earnings before financing expenses, financing income, and income taxes before special items at the aerospace unit. Cash-flow guidance was also cut to $800 million from a previous estimate of $1.2-1.6 billion.
The first Learjet 85 test aircraft completed a maiden flight last April, but Bombardier executives declined to provide an updated schedule for entry into service. The entire project was placed into a broader review of the company's development priorities instead, with the CSeries and Global 7000 and 8000 business jets given higher preference.
"Given the weakness of the market, we made the difficult decision to pause the Learjet 85 programme at this time," says Bombardier president and chief executive Pierre Beaudoin. "We will focus our resources on our two other clean-sheet aircraft programmes under development."
Despite the charges and the Learjet 85 pause, Bombardier has reported 2014 aircraft deliveries that beat its expectations.
It delivered 290 aircraft last year, comprising 204 business jets, 84 commercial aircraft and two amphibious aircraft. The company had forecast deliveries of 280 aircraft, including 80 commercial aircraft.
Source: FlightGlobal.com
