$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

  • Researchers find way to turn wood into supercapacitors
  • Waterloo showcases new tire devulcanization facility
  • Nissan sales surpass 100,000 for first time in Canada
  • Bombardier to build more commuter trains for London transit
  • 2018 Oil Price Forecasts
  • Keystone XL clears another hurdle but fight not over
  • Williams Advance Engineering Develops Ground-Breaking Aerofoil
  • Tesla now biggest car maker in California
  • Recovery continues as NA car sales head for year 2000 levels
  • Concept car from Terrafugia has vertical takeoff and landing
  • High-level support continues for Keystone XL
  • "Fireworks" in Canada's economy as GDP rises 2.3 per cent in January
  • Manufacturing up in December amid uncertainty about future US-Canada relations
  • Canada's small businesses encouraged to invest for success
  • With $390 billion in trade at stake, Premier Ford met with manufacturing trade partners; says steel and aluminum tariffs hurt the U.S. more than Canada
  • Canada's economy rebounds with stronger manufacturing, construction
  • News of extra jobs tempered by caution in Ontario auto sector
  • NASA Invests in Concept Development for Missions
  • The latest breakthroughs in EV technology; batteries that charge in under 10 minutes 
  • Toronto researchers reveal spray-on photovoltaics
Scroll to Top