We have restructured the operations of Bombardier Aerospace to enhance the group’s competitive- ness and leadership position—and we are starting to see the results. 

Bombardier Aerospace is a world leader in the design and manufacture of innovative aviation products and services for the business, regional and amphibious aircraft markets. With a legacy of innovation consolidating over 250 years of aviation history from four of the world’s original leading aircraft manufacturers (Canadair, Short Brothers, Learjet and de Havilland), Bombardier Aerospace has launched an unparalleled 15 new aircraft programs in the past 15 years. The group also offers the Bombardier * Flexjet * fractional own- ership program and the Bombardier * Skyjet * aircraft charter program, as well as management and technical services, aircraft maintenance and pilot training. 

During fiscal year 2004, aggressive action was taken to streamline operations, reduce costs and increase productivity—positioning the group to derive maximum benefit from continuing strong demand for regional aircraft and an improving outlook for business aircraft. 

The timely entry into service of the new Bombardier * Challenger * 300 and Bombardier * Learjet * 40 business jets, to be followed by the entry into service of the Bombardier Global 5000 * aircraft this fiscal year, have further enhanced the most modern, comprehensive portfolio in business aviation—just as more customers are entering or returning to the marketplace. This trio of new business jets reflects a decision to continue investing in new aircraft during the prolonged market downturn, and attests to Bombardier’s ongoing commitment to innovation and prod- uct development. 

## BOMBARDIER Aerospace 

The group also reinforced its position as the lead- ing designer and manufacturer of regional jets, with the initial deliveries of the 86-passenger Bombardier * CRJ900 $^{*}$, the first 70-plus-seat regional aircraft on the market. 

The implementation of widespread cost reduction measures, the creation of integrated manufac- turing centres for business aircraft, the re-opening of collective agreements at the Toronto, Ontario and Wichita, Kansas sites, and the outsourcing of certain information technology functions have all contributed to a leaner, more competitive organization that is better able to respond to the realities of a changing market environment. 

In March 2003, the group announced plans to reduce staffing at Aerospace facilities in Montréal, Toronto and Belfast by a total of 3,000 people. That process is now complete. 

In October 2003, plans were unveiled for the creation of integrated manufacturing centres for Bombardier Learjet and Bombardier Challenger Series business jets at the Wichita and Montréal locations, respectively. Once fully operational, this initiative will produce annual savings estimated at $33 million while further reducing headcount by some 1,150. 

By combining final assembly and interior completion activities at the same sites, the new manufacturing centres will significantly reduce production cycle times and inventory levels and make it easier for customers to do business with Bombardier. 

Approximately 800 of the jobs impacted by the streamlining of production are in Tucson, Arizona. However, the Bombardier Business Aviation Services Centre will continue to operate at the site, adjacent to Tucson International Airport. In addition, Tucson has been selected as the 

location for the Western Bombardier Regional Aircraft Service Centre, which will result in the creation of approximately 300 new jobs over a three-year period. 

In January 2004, plans were announced to consolidate regional and business aircraft spare- parts activities into a single logistics organization designed to provide customers with substan- tially improved service. The new organization will move to a single SAP $^{**}$-based operating system and will establish new distribution warehouses in Chicago and Frankfurt that will be operated by world-renowned Caterpillar Logistics Services. 

The group’s commitment to innovation was underscored in December 2003, with the delivery of the milestone 1,000th Bombardier * CRJ * air- craft. By the end of the fiscal year, on January 31, 2004, the delivery total had climbed to 1,046— making the Bombardier CRJ, at that point, the sixth most successful commercial jetliner program ever. What began in the mid-1980s as a bold step into uncharted territory—there was no apparent market for a regional jet— sparked a revolution in airline transportation that continues today, as the regional jet spearheads a turnaround in the airline industry’s fortunes. 

Despite the problems being experienced by the airline industry overall, the regional seg- ment is growing—and profitable—and regional jets continue to be crucial to the economic health of the major airlines. Consider that between April 2000 and April 2003, regional jet seat capacity in the U.S. grew by 97%. A reflection of the continuing positive momentum in that regard was the conversion of options into a firm order for 32 50-seat Bombardier * CRJ200 * regional jets received in early March 2004, from Delta Connection. 

