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Bombardier Aerospace Aligns Its Regional Aircraft Production Rates With Current Market Demand

Bombardier Aerospace announced today that it is adjusting its regional aircraft production rates to reflect current market demand. As a result, the production rate for its CRJ700/900 regional jets will be reduced. This will be partly offset by an increase in the Q400 turboprop production level in response to the growing need for this type of cost efficient regional airliner, which is ideally suited to short-haul routes. Bombardier will adjust its workforce level accordingly. Total Bombardier aircraft deliveries this fiscal year expected to be at similar level as previous fiscal year, with different product mix.

"The restructuring of the airline industry continues, with relatively few orders for regional jets in the 70- to 90-seat jet category being awarded in recent years … we must be prudent and manage proactively our CRJ700/900 jets production schedule in the short term to ensure we achieve … success in the long term. This means making difficult but necessary decisions. We recognize the impact this decision will have on our affected employees and we will treat them fairly and with respect, " Mr. Beaudoin added.

The production rates will be adjusted as follows:
· For the 70-passenger CRJ700 and 90-seat CRJ900 regional jets, starting November 2006, a reduction to a rate of one aircraft produced every five days from a rate of one aircraft every three days, or a total of approximately 65 deliveries in the current fiscal year 2006/07 (year ending January 31, 2007) and approximately 50 deliveries in the next fiscal year 2007/08 (year ending January 31, 2008).

· For the Q-Series turboprop family, which includes the Q200, Q300 and Q400 airliners, starting in October 2006, the increase in the Q400 production level will result in a total of approximately 50 Q-Series deliveries in the current fiscal year 2006/07 and approximately 65 Q-Series deliveries in the next fiscal year 2007/08.

Impact on manpower:
By the end of the current fiscal year 2006/07, the workforce level at Bombardier's Toronto facility where the Q-Series and Global aircraft are manufactured will have risen by over 800 employees to reflect the increase in production levels.

However, we expect that the adjustment in the CRJ700/900 regional jets production rate will result in a workforce reduction of approximately 1,330 employees, including management, at its Montréal-area facilities and at its Belfast site over a nine-month period starting October 2006.Severance costs associated with the layoffs will total approximately $31 million US.