Aviation Needs New Orders Now

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The aircraft industry needs new orders now if it's to avoid even deeper cuts in the future, even though the economy seems to be on the mend according to a Canadian study. The Conference Board of Canada report (free registration required) says order cancellations over the past year have cut backlogs at Bombardier and other companies. It says that although things are looking up for the economy, bizjet orders tend to lag up to two years behind the return to prosperity and that could leave a big gap between when the airplanes currently on the books are built and the next ones are started. Conference Board spokesman Michael Burt told the Montreal Gazette that the overall trend is positive but it's a question whether recovery will happen quickly enough for aerospace. "We are moving in the right direction," he said. "The question is how quickly we move in the right direction."

The report was written before Bombardier announced 715 layoffs at its Montreal plant last week. Bombardier will announce its third quarter results today and there are no further announcements expected on the aerospace side. The good news for shareholders is that business is booming for Bombardier's rail and transit divisions and that should almost make up for the decline in the aircraft business.