Bombardier eyes second major cash investment from Quebec

In October 2015 Bombardier agreed to offering the Quebec government a 49.5% stake in a limited partnership, specifically attached to the company’s C Series, in return for a bailout investment of US$1 billion. The financial problems at the time related to the considerable delays and cost overruns for the project, together with a long-term slump in aircraft sales. The result culminated in Bombardier taking a US$3.2 billion impairment charge in the third quarter 2015, leading to a US$4.9 billion loss for that period.
However, Bombardier’s financial positioning has improved little, and further financial injection is being sought. While it was initially hoped that finance would come from the Canadian federal government, Quebec has now stepped in and indicated that if funding is not forthcoming from that direction within the next two weeks, they will be prepared to make a second payment to Bombardier. According to Jacques Daoust, who was only appointed Minister for Transport two weeks ago, “We’re in talks with Bombardier, we’re watching what is happening with the federal government very closely. If as of March 31, the federal government isn’t present, the Government of Quebec will have a decision to make. But we’ve always supported Bombardier. It’s a jewel of our economy, and we will continue.” As Industry Minister, Daoust was responsible for setting up the provincial investment from Quebec.
It is understood that the funds being discussed are of the same magnitude as the original bail out figure. Navdeep Bains, the Federal Innovation, Science and Economic Development Minister is apparently “very receptive” to the prospect of providing assistance to Bombardier, while Stefanie Power, a spokeswoman for Bains’ department, confirmed in a written statement that talks are ongoing: “The federal government is engaged in a dialogue with Bombardier to better understand the company’s situation and priorities and is working towards a timely decision. There has to be a strong business case for making a federal investment. Any assistance would have to be in the best interest of all Canadians.”
Currently, Bombardier is over two years late and approximately US$2 billion over budget with the C Series. The aircraft can seat 108 to 160 people, a step up in size from Bombardier’s signature regional aircraft, and has been designed to target the Boeing-Airbus duopoly on single-aisle commercial aircraft.