Quebec opens door to new Bombardier backers
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.
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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.