The federal government says it will give Bombardier $372.5 million in loans over four years to support the Global 7000 and CSeries aircraft projects.
Most of the money would go to the Global 7000 business aircraft program, which is scheduled to go into commercial service next year. The rest would go to the CSeries passenger jet, which was mired in delays and cost overruns prior to entering commercial service last year.
- Bombardier lowers delivery forecast for CSeries jets
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- Bombardier to delay Global 7000 business jet after profit falls
Several federal cabinet ministers made the announcement at a Bombardier facility in Montreal.
“Bombardier plays a vital role, both as an anchor employer and an innovation leader,” said Innovation Minister Navdeep Bains.
“The government of Canada is proud to invest in research and development activities that secure Canadian jobs, while enabling Bombardier to grow as a globally competitive company for years to come.”
Bombardier CEO Alain Bellemare (left) and Transport Minister Marc Garneau (right) say the $372.5-million loan is the right solution. (CBC)
Bombardier CEO Alain Bellemare welcomed the federal support.
“The repayable contributions announced today will help to ensure that Canada remains at the centre of Bombardier’s research and development activities, which are focused on developing the most efficient, reliable and environmentally friendly aircraft in the world,” Bellemare said.
“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.”
- Liberals ready to invest in Bombardier, says innovation minister
- Bombardier gets final instalment of Quebec’s $1B US investment in CSeries
Bombardier had been appealing for $1 billion US in federal assistance since late 2015.
Last year, the company received a $1 billion US investment for the CSeries passenger jet program from the Quebec government in exchange for a 49.5 per cent stake.
As of late November, Bombardier received at least 360 firm orders for the CSeries jets.
Friction with foreign competitors?
From a fiscal perspective, providing loans to Bombardier allows Ottawa to offer assistance without hurting the fiscal balance, as they would be recorded on the balance sheet as an asset.
Still, the federal assistance for the Montreal-based aerospace manufacturer could rile foreign competitors.
Brazil has said it would launch a trade challenge against Canada before the World Trade Organization over financial support for Bombardier, which competes with Brazilian-based Embraer.
Bombardier’s CS100 model is shown in the company’s hangar in Mirabel, Que. Most of federal funds announced Tuesday will go to the Global 7000 business aircraft program, which is scheduled to go into commercial service next year. (Rebecca Ugolini/CBC)
Bombardier said such a move would be without merit.
Brazil has complained about $2.5 billion US in investments in Bombardier, including money to “ensure the viability of the new CSeries aircraft and its placing on the market at artificially reduced prices.”
In December, Prime Minister Justin Trudeau said he was hopeful a deal with Bombardier could be reached before the spring federal budget, adding that all countries, including Brazil, help their aerospace sectors.
Bombardier has announced job cuts totalling 14,500 positions over the last two years in an effort to regain its financial footing.