Bombardier cancels big Learjet contract

Bombardier Aerospace has pulled the plug ona year-old deal to supplyPortugal-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 announcementthat it was "technically insolvent" because of funding problems and was no longer in business.

Jet Republic had planned tolaunch a fractional jet ownership businessselling partial ownershipor renting out Learjets by the hour to European customers.

In June 2008, Jet Republic signed a firm deal with Bombardier for 25 Learjet60 XR aircraft with options for 85 more.

Bombardier said it remains committed to the Learjet60 XRprogram and production atits 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.