The federal government is loaning troubled Montreal-based Bombardier $372.5 million. Innovation Minister Navdeep Bains made the announcement Tuesday February 7, 2017. The loans will be interest-free, and given to the company in installments.
“The investment I’m announcing today is the right solution for the time, and in terms of innovation, jobs and long-term competitiveness for the company,” Bains told the CBC. The majority of the loans will go to the Global 7000 business aircraft program, which is scheduled to enter commercial service next year.
One-third of the money is allocated to the “C Series.” The plane has had its problems with delays, and cost overruns. “It started out on a piece of paper and then became the best plane in the world in its class. This is something to be proud about,” Transport Minister Marc Garneau told the CBC. Garneau joined Bains at the announcement.
Bombardier CEO Alain Bellemare appreciates the help. “To have the federal government commit to research and development, to programs that are currently in place, is important and sends a strong signal to Bombardier and to the othe rplayers in the aerospace industry that the federal government is there to support this industry,” he told CBC. They are planning to use the royalties on each aircraft sold to pay off the loans.
Bombardier Loan Causes Industry Problems?
The loans given without affecting the fiscal balance, would be recorded on the company’s accounts as an “asset.” This could cause issues with competitors. Brazil has already stated it would launch a complaint against Canada on behalf of Embraer. Bombardier disputes its claim.
The company has received approximately 360 orders for the “C Series” jets. “Our liquidity position is very secure. Now we can think about the future,” Bellemare said. Over the last two years Bombardier has cut 14,500 jobs. The Quebec provincial government invested $1 billion in the company last year.