* Included firm order for 25 jets, options for 85 more
* Order was worth $240 mln; up to $1.5 bln with options
* Jet Republic declares insolvency
* Bombardier says remains committed to Learjet production
* Shares down 4.6 percent on the TSX (Adds details, company quote, analysts' quotes. In U.S. dollars unless noted)
By John McCrank
TORONTO, Aug 20 (Reuters) - Bombardier Inc (BBDb.TO) said on Thursday that it scrapped a large Learjet contract with Jet Republic after the upstart private aviation company declared insolvency, underlining the ongoing turbulence in the business jet market.
Shares of Bombardier were down 19 Canadian cents, or 4.6 percent, at C$3.95 on the Toronto Stock Exchange shortly after the market opened.
The contract for 25 Learjet 60 XR mid-sized jets accounted for $240 million of Bombardier's backlog. If the options for 85 more jets had been exercised, it would have been worth up to $1.5 billion.
The jets were due to enter service over the course of the next two years, starting in October 2009.
The Montreal-based aerospace and transportation company's aerospace's backlog stood at $22.4 billion as of April 30.
"The order was among the largest single business jet orders Bombardier had ever recorded," Cameron Doerksen, an analyst at Versant Partners, said in a note to clients.
"We believe that this cancellation may result in a further production rate cut to the Learjet 60 line."
Bombardier spokeswoman Danielle Boudreau said in an interview that, for now, Learjet operations at the company's facility in Wichita, Kansas, would continue as planned.
"At this time, we have no plans to change production, so the Learjet 60 XR program continues as planned," she said.
According to Benoit Poirier, an analyst at Desjardins Securities, the firm portion of the order likely represented 6 percent of Bombardier's total business jet backlog, but less in dollar terms, "given that the lower end Learjets have among the lowest list prices within Bombardier's business jet offering."
Bombardier will report quarterly results on Sept. 2.
A spokesman for Jet Republic in London said the company would be putting out a statement shortly.
The company, which has its operational headquarters in Lisbon and corporate headquarters in Switzerland, was created last year and planned to sell shares in each jet or rent each one out on an hourly basis. It was backed by Austria's Euram bank.
Jet Republic's main competitor was Berkshire Hathaway Inc's (BRKa.N)(BRKb.N) private jet-sharing company NetJets Inc.
Given the problems facing the aerospace market, Versant's Doerksen said his firm maintained its "neutral" rating on Bombardier, with a C$3.90 price target.
Desjardins Securities rates Bombardier a "buy", with a C$6.00 stock target.
Separately, last week, Bombardier said it canceled a deal to supply Italian low-cost carrier MyAir.com with 15 CRJ1000 regional jets, after MyAir had its license suspended by Italy's aviation authorities due to financial difficulties.
($1=$1.10 Canadian) (Additional reporting by Scott Anderson; editing by Rob Wilson)