Bombardier Aerospace
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Bombardier Aerospace

October 24, 2006 08:01 ET

Bombardier Aerospace Aligns its Regional Aircraft Production Rates with Current Market Demand

- Reduction of Bombardier CRJ700/900 regional jets production rate - Increase of Bombardier Q400 turboprop production rate - Total Bombardier aircraft deliveries this fiscal year expected to be at similar level as previous fiscal year, with different product mix

MONTREAL, QUEBEC--(CCNMatthews - Oct. 24, 2006) - 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 for the current fiscal year 2006/07 are expected to remain at a similar level to that of last fiscal year 2005/06 (year ending January 31, 2006), but with a different product mix.

"We lead the regional aircraft market with 1,376 deliveries of our CRJ Series and 749 deliveries of our Q-Series regional aircraft, including more than 320 deliveries of our CRJ700/900 regional jets and over 350 deliveries of Q300/400 turboprop aircraft as of July 31, 2006. Recent orders for both our larger 90-passenger CRJ900 aircraft from Northwest Airlines and My Way Airlines and 70-seat Q400 aircraft from Frontier Airlines and Luxair demonstrate that we have the right products for operators looking to take advantage of our regional aircraft's competitive operating economics," said Pierre Beaudoin, President and Chief Operating Officer, Bombardier Aerospace.

"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. This situation should improve as attested by the numerous sales campaigns we are actively pursuing. However, we must be prudent and manage proactively our CRJ700/900 jets production schedule in the short term to ensure we achieve our goal of increased profitability and our 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 Montreal-area facilities and at its Belfast site over a nine-month period starting October 2006.

Total Bombardier Aerospace employment as of July 2006 was approximately 26,900. The overall workforce level has remained at a similar level since January 2004.



Impact on manpower level by sites
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Site Number of layoffs Employees to leave
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Belfast 645 Starting
January 2007
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Montreal-area sites 485 Starting late
November 2006
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Management and other 200 Starting
salaried employees in Canada October 2006
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Total 1,330
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Severance costs associated with the layoffs will total approximately $31 million US and the majority of these costs will be expensed through the normal course of operations in the third quarter of the current fiscal year 2006/07 (year ending January 31, 2007).

While the order level for larger regional jets is still challenging, the order book for turboprops is growing. Furthermore, orders and deliveries of business aircraft continue to rise year over year. Bombardier is ideally positioned in corporate aviation, with the broadest and most modern line-up of business aircraft to meet strong demand in North America and Europe and growing interest in the Asia-Pacific region. According to the latest General Aviation Manufacturer Association (GAMA) figures for the first half of 2006, Bombardier is a leader with 30 per cent of all business jet deliveries.

About Bombardier

A world-leading manufacturer of innovative transportation solutions, from regional aircraft and business jets to rail transportation equipment, Bombardier Inc. is a global corporation headquartered in Canada. Its revenues for the fiscal year ended Jan. 31, 2006, were $14.7 billion US and its shares are traded on the Toronto Stock Exchange (BBD).

Bombardier, CRJ, CRJ700, CRJ900, Q-Series, Q200, Q300, Q400 and Global are trademark(s) of Bombardier Inc. or its subsidiaries.

FORWARD-LOOKING STATEMENTS

This press release includes "forward-looking statements" that are subject to risks and uncertainties. For information identifying legislative or regulatory, economic, currency, technological, competitive and other important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, see Bombardier's Annual Report under the heading Risks and Uncertainties in the Management's Discussion and Analysis section.

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