Feds loan Bombardier $372M for jet programs
Deal falls short of $1 billion requested
The f ederal government will provide $ 372 million in loans for Bombardier to help finance two jet programs, including the company’s C Series line.
The controversial deal is far short of the $1 billion the company had been asking from the federal government.
Brazil has threatened to launch a trade challenge against Canada before the World Trade Organization over financial support for Bombardier, which competes with Brazilian- based Embraer. Bombardier said such a move would be without merit.
Brazil has complained about US$ 2.5 billion in investments in Bombardier, i ncluding money to “ensure the viability of the new CSeries aircraft and its placing on the market at artificially reduced prices.”
The funding could also resolve the long- simmering issue before it can become a major thorn in any new talks with the U. S. government on the North American Free Trade Agreement.
“Through its collaboration with Bombardier, the Government of Canada is investing in thousands of Canadians and hundreds of suppliers across the country. As the nation’s largest aerospace company, Bombardier supports thousands of jobs in design, engineering and manufacturing through its nationwide supply chain of companies,” Innovation Minister Navdeep Bains said in a news release.
“While we compete globally, we are proud of our Canadian home, our heritage and our position as one of Canada’s leading high-technology manufacturers and employers,” said Alain Bellemare, the CEO of Bombardier.
The Global 7000 will be Bombardier’s biggest business jet — part of a product category that has traditional l y been Bombardier’s most profitable. It’s due to enter service in the second half of 2018. The C Series was two- and- a- half years late and more than $ 2 billion over budget when it made its commercial debut at Deutsche Lufthansa AG’s Swiss International unit in July. Since then, the jet has been performing better than expected, the airline said.
As of late November, Bombardier received at least 360 firm orders for the C Series jets.
In a recent i nterview, Bains said aid for the company would be rolled out as part of an innovation strategy aimed at building a skilled workforce.
“We believe the path forward for Canada is to really proceed with a robust innovation agenda to achieve the same goals in long- term growth, good- quality jobs and strengthening the middle class,” Bains said Jan. 24. “Within that context, if it’s the aerospace sector or Bombardier, we want to make sure that takes place as part of that strategy.”
Bombardier had been appealing for US$ 1 billion in federal assistance since late 2015.
Prime Minister Justin Trudeau’s team wanted governance changes in return, including to the dual- class share structure that allows the company’s founding Bombardier and Beaudoin families to control the firm without holding a majority stake. Bombardier rejected the government’s initial pitch.
The company has since said talks were “taking a different path.”
Last year, the company received a US$ 1- billion investment for the C Series passenger jet program from the Quebec government in exchange for a 49.5-per-cent stake.
From a fiscal perspective, providing loans to Bombardier allows Ottawa to offer assistance to Bombardier without hurting the fiscal balance, as they would be recorded on the balance sheet as an asset.