$1 billion injection from Quebec government will keep Bombardier aloft

BOMBARDIER-Paris-CSeries-Boeing-Airbus-EDIWeekly

As widely expected, Bombardier has accepted a $1 billion bailout from the Quebec government after reporting a fourth quarter loss of $4.9 billion. The company has rid itself of the unprofitable Learjet 85 program and will concentrate on the C Series jet. The C Series has been in development since 2004 and has had major cost overruns. To make matters worse, sales have not been as robust as the company had anticipated. The C Series competes with both Airbus and Boeing in the 100–160-seat category. With its investment of $1 billion, the Quebec government acquires 49.5 per cent ownership of the C Series program. The CEO of Bombardier, Alain Bellemare, characterized the bailout as “having a partner inject liquidity.”

Some analysts say the Quebec government had little choice but to rescue the aerospace giant. Not only is it a matter of national pride, but the company employs about 17,000 workers, many of them highly skilled. Salaries in the aerospace industry in Quebec are double the provincial average.

The government’s action is by no means universally popular in Quebec, and opposition parties have denounced it. Without the government’s intervention, however, there is a real risk that the aerospace industry could disappear from Quebec. There is still the possibility that the new government in Ottawa could play some role in assisting Bombardier. It is not uncommon in this industry for governments to provide such help. Both Airbus and the Brazilian airplane maker Embraer receive “considerable” government help according to a McGill University professor quoted in the Toronto Star.

Bombardier’s CFO downplayed concerns about the company’s liquidity situation, saying that the C Series will be profitable in less than five years. By 2020-2021 it will be generating positive cash flow, John Di Bert said. In the meantime, at least another $2 billion will have to be spent

Bombardier is also actively seeking a buyer for a minority stake in its train-making division, headquartered in Berlin.

Did you miss this?

Other Popular Stories

  • Who says bigger isn't better: General Electrics massive carbon-fibre 3D printed engine more fuel efficient
  • Irving Shipbuilding looking to lure workers back east from Alberta
  • Canada-US trade as it should be, but diversification desirable: report
  • Ontario and Saskatchewan criticizes the Federal Canadian Minerals and Metals Plan in a joint official statement
  • Bombardier Competitor Comes to Toronto
  • CAE to acquire Lockheed Martin flight training division
  • Game over for Hydrogen fuel cells? Not really — but an explosion in Norway halts sales of hydrogen fuel cell cars locally
  • Solar-powered nanoheaters offer solution for off-grid medical sterilization
  • National Energy Board not doing enough to ensure pipeline safety: report
  • Canada one of only three countries where clean energy investment grew
  • Contractors, steel workers unions support Northern Gateway pipeline
  • Large CSeries order builds momentum for Bombardier
  • Construction giant to revolutionize industry with 3D concrete printing
  • Is Clean Diesel a myth, or a yet-to-come promise?
  • Renewable energy use increased in US in 2012
  • Elon Musk, the master of disruptive technology companies: his life, successes — and failures
  • Air Canada signs MRO contract with Duluth provider
  • Electro Water Separation (EWS) or Electro Coagulation: Treatment system uses electricity to clean contaminated water
  • Canada Goose expanding workforce, launching global ad campaign
  • Hypersonic Jet Engine That Can Go 16 Times the Speed of Sound
Scroll to Top