Quebec opens door to new Bom­bardier backers

The Globe and Mail (Alberta Edition) - - REPORT ON BUSINESS WEEKEND - NI­CO­LAS VAN PRAET MONTREAL

Quebec says it is open to other in­vestors in Bom­bardier Inc.’s C Se­ries un­der cer­tain con­di­tions as spec­u­la­tion mounts about a pos­si­ble Chi­nese in­vest­ment in the air­liner pro­gram.

“Any part­ner­ship at­trac­tive to Quebec that main­tains the C Se­ries head of­fice and en­gi­neer­ing jobs at home will be wel­come,” Quebec Premier Philippe Couil­lard told re­porters in Jerusalem, where he was tak­ing part in a trade mis­sion to Is­rael.

New ques­tions are be­ing raised about Bom­bardier’s plans for the C Se­ries af­ter a re­port the Cana­dian com­pany held talks with Chi­nese state-owned aero­space man­u­fac­turer Co­mac about an in­vest­ment in the fledg­ling air­craft pro­gram.

Co­mac is work­ing with at least one bank on a tie-up that could in­volve an in­vest­ment in Bom­bardier’s com­mer­cial aero­space arm or take a stake in the C Se­ries pro­gram, the Fi­nan­cial Times said on Thurs­day, cit­ing un­named sources.

“Ev­ery­thing is on the ta­ble,” the news­pa­per quoted a source as say­ing.

The com­pa­nies have been in talks for some time, although no de­ci­sion is im­mi­nent, the pa­per re­ported. Bom­bardier has de­clined to com­ment on the re­port, call­ing it mar­ket ru­mour.

Quebec made a $1-bil­lion (U.S.) in­vest­ment in the C Se­ries last year that saved the pro­gram and the plane maker from pos­si­ble col­lapse.

» At the time, Montreal-based Bom­bardier was grap­pling with a cash crunch as it tried to get the 100- to 150-seat air­liner to mar­ket af­ter a two-year de­lay and ris­ing costs.

The C Se­ries has since started com­mer­cial ser­vice, earn­ing rave early re­views for its per­for­mance. The key chal­lenge for Bom­bardier now is to hold the line on the air­craft’s pric­ing. Like other man­u­fac­tur­ers in­tro­duc­ing new planes, it of­fered steep dis­counts to early buy­ers, but will have to win bet­ter terms on new or­ders to boost prof­itabil­ity.

Quebec owns a 49.5-per-cent stake in a lim­ited part­ner­ship that con­trols the C Se­ries pro­gram. That in­vest­ment is now the sub­ject of a trade com­plaint by Boe­ing Co. Bom­bardier owns 50.5 per cent and holds op­er­a­tional con­trol of the pro­gram.

In ex­change for the cash in­fu­sion, Bom­bardier agreed to main­tain the strate­gic, fi­nan­cial and op­er­a­tional head­quar­ters of the lim­ited part­ner­ship in Quebec for at least 20 years. Un­der the deal, “assem­bly, man­u­fac­tur­ing, en­gi­neer­ing ser­vices and re­search and de­vel­op­ment ac­tiv­i­ties” of the part­ner­ship will also re­main in Quebec for the same length of time, ac­cord­ing to a Bom­bardier state­ment ex­plain­ing the terms.

Mr. Couil­lard said Quebec has a say in any new C Se­ries in­vestor that Bom­bardier brings into the fold. “There can­not be agree­ment with­out our in­volve­ment,” the Premier said. His com­ments were re­ported by Montreal’s La Presse news­pa­per, which had a jour­nal­ist on site.

Bom­bardier and Co­mac signed a strate­gic co-op­er­a­tion agree­ment in 2012 to col­lab­o­rate on com­mon sys­tems for the C919 and C Se­ries planes. The part­ner­ship in­cluded work­ing to­gether on cock­pit and elec­tri­cal sys­tems as well as the sup­ply chain.

Bom­bardier (BBD.B) Close: $2.11, up 5¢

PAUL CHIASSON/THE CANA­DIAN PRESS

A Bom­bardier C Se­ries jet sits in a hangar in Montreal in Fe­bru­ary, 2016. Quebec owns a 49.5-per-cent stake in a lim­ited part­ner­ship that con­trols the C Se­ries pro­gram.

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