Bombardier cancels big Learjet contract
Jet Republic 'insolvent'
Bombardier Aerospace has pulled the plug on a year-old deal to supply Portugal-based Jet Republic with up to 110 Learjets worth $1.5 billion US.
Bombardier gave no reason for the termination. But the cancellation followed Jet Republic's announcement that it was "technically insolvent" because of funding problems and was no longer in business.
Jet Republic had planned to launch a fractional jet ownership business — selling partial ownership or renting out Learjets by the hour to European customers.
In June 2008, Jet Republic signed a firm deal with Bombardier for 25 Learjet 60 XR aircraft with options for 85 more.
Bombardier said it remains committed to the Learjet 60 XR program and production at its factory in Wichita, Kan., will continue. Bombardier bought Learjet in 1990.
This is the second purchase order Bombardier Aerospace has cancelled in the last 10 days. On Aug. 11, the company terminated an order with My Way Airlines of Italy for all undelivered CRJ1000 commercial aircraft, citing the airline's "uncertain situation."
Analysts say Bombardier may have to lay off more workers.
Bombardier's Class B shares slumped 16 cents to close at $3.98 on the TSX.