Loan from Ottawa won’t be fully repaid for 15 years, Bombardier says
TORONTO — The federal government’s $372.5 million loan to Bombardier won’t be fully repaid for 15 years, and those repayments will depend on the number of business jets and CSeries aircraft sold.
Providing details for the first time on the terms of the interestfree loan, announced earlier this month, Bombardier chief financial officer John Di Bert said Thursday it’s “royalty repayable.”
“That means that it will be repaid on either a function of business jet revenues or CSeries unit deliveries,” Di Bert told analysts on the company’s fourth-quarter earnings call.
“It will be over a significant amount of time,” he added. “The program runs for about 15 years including a bit of a grace period the first two years, so no repayments for the first two years.”
Di Bert said the company will receive between $70 million and $100 million a year from 2017 to 2020.
The funding will go towards research and development of Bombardier’s new Global 7000 business jet and the ongoing development of the CSeries commercial jet.
Bombardier said it expects to deliver 30 to 35 CSeries this year, up from seven last year, as engine supplier Pratt & Whitney works through the supply-chain problems that delayed production in 2016.
Chief executive Alain Bellemare said he still expects to be able to announce another big CSeries order this year. The last major order for the aircraft was in April 2016 from Delta Air Lines Inc.
“If anything, our confidence is increasing,” Bellemare said. “There’s clearly a market demand for this (aircraft).”
Bombardier reported a fourthquarter loss before special items of US7 cents per share, wider than the US3 cents loss forecast by analysts. Revenue fell 13 per cent to US$4.38 billion as the company delivered fewer business jets. However, Bombardier’s full-year earnings and cash flow exceeded its guidance, and it reiterated that it expects low single-digit revenue growth and a 35 per cent increase in earnings before interest, taxes and special items for 2017.
If anything, our confidence is increasing. There’s clearly a market demand for this (aircraft).” Bombardier Chief executive Alain Bellemare