Ask anyone to name a private jet, and they will respond with the same company: Learjet. Yet despite having created the modern business jet, the company’s recent ceasing of aircraft production clearly signals how Learjet as a company, has failed…
In its nearly 60 year history, the company delivered a total of 3058 aircraft to customers on every inhabited continent, becoming an icon in the process. But alas, the company is little more than a shell of its once-great self.
History
Before we can discuss how and why Learjet has failed, we must first look at the background of the company and how it has evolved over the years.
Founding
In 1962, self-taught American engineer Bill Lear decided enough was enough. He was no longer going to work to make someone else rich from his inventions, and incorporated the Swiss American Aircraft Corporation (SAAC).
Founded expressly with the purpose of creating a jet-powered corporate/VIP transport aircraft. Backed by a team of Swiss, German and British engineers, Lear used the failed FFA P-16 ground attack fighter as the basis of what he called the SAAC 23.
The following year, Bill renamed the company the Lear Jet Corporation and its first aircraft, the now-renamed Lear Jet 23, first flew on October 7 1963.
Despite the prototype crashing during a test flight – a crash deemed to have been caused by pilot error – the Lear Jet 23 gained on July 31 1964, whilst the first production aircraft was delivered on October 13 that same year.
A month later, the company went public, causing what can best be described as a frenzy on Wall Street; everybody wanted a piece of the action.
Hoping to capitalize on the Lear Jet 23’s success, and keep Wall Street happy, a slew of Lear Jet 23 derivatives, including the Learjet 24 and 25, flooded the market in less than two years.
On September 19 1966 the Lear jet Corporation was officially renamed Lear Jet Industries Inc.
Expansion
Owing to Learjet’s status as a public company, it was easily bought out by the Gates Rubber Company of Denver, Colorado, who acquired Bill Lear’s 60% stake in the company for $27 million in April 1967.
At the time, Gates’ CEO Charles Gates Jr. was attempting to diversify the company into aviation, and had already acquired two FBOs, Indianapolis-based Roscoe Turner Aeronautical Corporation and Denver-based Combs Aircraft, merging them together to form Gates Aviation.
In April 1967, almost two years to the day of Gates’ acquisition, the Gates and Learjet boards voted to merge Gates Aviation and Learjet into one company, with the merged entity being renamed Gates Learjet.
One of the new company’s first acts was to begin development of a new jet based on the Learjet 25. Later known as the Learjet 35, which was essential a Lear 25 with new engines, was unveiled in 1971 and entered service in 1973.
In 1974, the company was awarded the President’s “E” Award for exports, thanks to the Lear 35’s popularity with foreign customers especially.
Receiving this award, as well as its continuing desire to outcompete arch-rival Cessna, the company continued developing new aircraft, such as the Learjet 28/29 and 55 families.
Though the former was mostly unsuccessful – only selling nine copies in total – the latter was incredibly successful, selling 147 copies in three different variants (Models 54, 55 and 56) and setting several world records.
A Struggle
In spite of their record-breaking success, both for world and company records, their financial success was somewhat lacking, as competitors and eagle-eyed funds vied to take over the company, causing much uncertainty.
Between 1984 and 1987, the company was the target of three aggressive takeover attempts, surviving each one, with the ensuing uncertainty leading to a profit dip not helped by a slump in new jet sales.
A slew of new chief executives were named by Gates to bring Gates-Learjet out of its nosedive before New York-based Integrated Acquisition, Inc. bought Gates’ 64.8% stake in the company for $56.8 million in September 1987.
After acquiring the remaining shares in the company, Gates-Learjet was officially restructured as the Learjet Corporation, where it embarked on a painful return to an industry titan.
The company embarked on a hiring spree, returned to its manufacturing facilities in Wichita (during their financial woes, manufacturing had been moved to Tucson, Arizona) and initiated a marketing campaign unlike any other in aviation history.
All in an attempt to regain lost customers and gain customers. And guess what? It worked.
Recent History
Two years later, in 1990, Canadian engineering conglomerate Bombardier acquired the company for $75 million, where it operated under the company’s aviation subsidiary, Bombardier Aviation.
Immediately following the Bombardier acquisition, Learjet ceased production of the Learjet 55 and replaced it in production with the upgraded Learjet 60 in 1991.
The company’s first clean-sheet design (eg. one that had not evolved from the original 1963 Lear Jet 23), known as the Learjet 45, followed soon after, having its first flight on October 7 1995.
Very quickly, the Learjet 45 became the most popular Learjet aircraft – a title it still holds to this day with a staggering 643 units built between 1995 and 2012!
But the introduction of two extremely successful jets in less half a decade did not go unnoticed by the company’s competitors, namely Cessna and Embraer, who hit with their own new aircraft in an attempt to lure Learjet’s would-be customers.
Hoping to beat their competitors with an aircraft unlike any other on the market, Learjet unveiled the Learjet 85 project at the 2008 NBAA show in Orlando, Florida.
As the company’s first composite structure business jet, the Learjet 85 was designed to meet new FAA regulations (FAR-25) and sit between the Midsize and Super Midsize business jet categories, offering them a unique advantage.
A working prototype was completed in early spring 2014 and the jet had its first test flight on April 9 that same year. In January 2015, while the jet was still doing test flights, Bombardier announced it was pausing the Learjet 85 program citing high development costs.
In October the same year, the company announced it was scrapping the program altogether.
But that was not the end of Learjet. In 2013, it had commenced production of the Learjet 75 family, a derivative of the Learjet 45 family, including the Learjet 75 (Lear 45) and Learjet 70 (Lear 40).
The Death of Learjet
And Learjet kept on going. Though not as popular as previous aircraft, the Learjet 75 family garnered nearly 200 orders in a nearly nine year-long production run. Not bad for an aircraft whose only difference from its predecessor was a new engine and slightly better interior.
Alas, this would not last.
On February 11 2021, Bombardier released its Annual Report for the 2020 financial year. Aside from releasing its financial data, CEO and chairman letters, the report announced the end of production for all Learjet models still in production.
Despite this, the company promised to continue providing maintenance and support for the remaining Learjet fleet worldwide.
The last Learjet 75 rolled off the production line in January 2022 and was delivered to its customer, Northern Jet Management, on March 28 2022, marking then end of a true legend of aviation.
Why Did Learjet Fail?
Rising Costs
Developing an aircraft of any size has never been cheap. Apart from labor costs to design and build your aircraft, you have to pay for its certification, as well as any modifications that need to be made to its design, not to mention market it effectively.
What this has meant for aircraft manufacturers is that developing new aircraft is an extremely risky endeavor, and could potentially bankrupt them if the aircraft they are developing isn’t successful.
But this comes with the territory of being in the aircraft manufacturing industry, and is something most manufacturers accept.
The only problem is that over the last 30 years in particular, the costs of developing a new aircraft has increased exponentially.
Chiefly, this has come in the form of regulations. Keen to ensure their aircraft are as safe as possible, regulatory agencies like the FAA have introduced new regulations mandating new aircraft meet new safety standards.
For aircraft manufacturers, this has meant that their designs need several rounds of reengineering, both delaying the aircraft’s time to market and increasing the amount of money they have to spend on development.
Other cost increases have come in the form of wage rises for employees. As living costs have increased, so too have wages, and thus the annual wage bill of aircraft manufacturers.
Though part of this cost has been offset by the development of new technologies, such as Computer Aided Design (CAD), which has cut down on the need for jobs like draftsmen, these technologies themselves are not cheap.
For Learjet specifically, this has increased the risk of it going bankrupt even in spite of Bombardier’s ownership, and ensured that they rarely took this risk.
You could argue that when they took this risk with the Learjet 85, it failed to pay off and likely sped up, if not outright instigated, the demise of Learjet.
Mediocre Designs
Due to these rising costs, Learjet has long attempted to minimize their real costs by constantly building off the framework of previous jets.
The 1963 Learjet 23 served as the common “ancestor” if you will for multiple aircraft, including the Learjet 24, 25, 28, 31 and 35/36. Likewise the all-new Learjet 45 served as the basis for the shorter Learjet 40 and the newer Learjet 70 and 75.
Whilst this met its aim of reducing development costs for the company, as well as training costs for potential customers – as many of these aircraft flew on the same type certificate – it ultimately doomed the company.
It ensured that whenever a competitor released an all-new design, its specs always beat whatever the latest Learjet model was by a wide margin.
Coupled with the cheaper operational costs, better on-board facilities and cheaper acquisition costs of these new competitor jets, and you wouldn’t be surprised why…
Lacking Orders
By most accounts, Cessna and Embraer – the company’s two main competitors – were selling more light and mid-size jets than Learjet was by a factor of three, mostly due to their superior designs.
If it were much closer, this fact would be overlooked by most potential customers, who’d have instead taken it as meaning shorter lead times from them placing the order to receiving their aircraft.
However, as it was so large, the reason behind it was both evident and easily accessible. Any prospective buying doing their research on the company quickly found this reason, which scared them away, creating something of a negative multiplier effect.
But it was also more than that.
With orders, and thus deliveries, for Learjet aircraft only totalling a dozen or so per year, this raised the per unit cost of production for the company, as it cannot take advantage of cost savings its more productive competitors can.
In order to maintain profitability, the company has been forced to pass on these higher costs to customers, thus leading to higher prices than superior competitor aircraft.. not exactly a recipe for success.
Perhaps unsurprisingly, this too created a negative multiplier effect that at least partially led to Learjet’s demise.
The Bombardier Question
As a subsidiary of Bombardier, the Learjet line has long played second fiddle to the Challenger and Global lines of jets in almost every way.
Learjet want more funding? Sure. Oh wait, the Challenger project needs it, sorry. Learjet need more marketing? Sure. Oh wait, we’ve just unveiled a new Global jet, that takes priority. Sorry. Learjet need more engineers? Sorry, Bombardier just hired them all.
And whilst this makes sense – Bombardier have a larger profit margin from their Challenger and Global lines as they do their Learjet one – decades of doing this has arguably led to many of the above issues.
Because all the best engineers went to Bombardier instead, Learjet were stuck with engineers who were still world class, but not to the same extent their Bombardier colleagues were. Due to this, the quality of Learjet aircraft declined.
As quality declined, so did orders meaning that the cost per aircraft increased massively, reducing Learjet’s profit margin. This gave Bombardier the excuse it needed to prioritize the Challenger and Global lines over Learjet, to the detriment of the company.
Bombardier’s mere ownership of Learjet arguably killed the company too.
Whilst rivals like Cessna have developed the Citation family into a large line with individual jets in almost every category of business jet, Learjet have been pigeonholed into only producing light and midsize jets.
What has resulted is a clear divide between the low-end Learjet aircraft and high-end Challenger and Global aircraft, which have niches that are set in stone, rather than ones that flow freely.
This, in turn, has tied the hands of Learjet executives so much that as sales dropped off for their midsize jets, Bombardier made it so they couldn’t propose a new, much larger jet to boost sales. After all, that would harm their preferred Challenger and Global lines…
All of this is especially interesting, when you realize that 2020 was a difficult year for Bombardier financially, resulting in it nearly going bankrupt and being forced to sell its stake in the CSeries/A220 program to help avoid this.
Continuing to operate a subsidiary which was not nearly profitable enough in their eyes would not be a sound business move for the continued survival of the company as a whole.
What do you think about Learjet? Tell me in the comments!
Featured image courtesy of Viajar Ahora via Flickr.