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Bombardier has said flight testing is about 97 per cent complete, with an assembly line in Mirabel, Que., working on production planes for its first customer. Andy Cline Photo
Quebec’s aerospace cluster is praising the provincial government for investing US$1 billion in Bombardier’s C Series program, a decision that met with mixed reviews and gives the government a 49.5 per cent stake in a new joint company responsible for the C Series.
“This announcement demonstrates the importance the government attaches to the C Series and its significance to the development of Québec’s aerospace industry,” said Suzanne Benoît, president and chief executive officer of Aéro Montreal, in a news release.
“Bombardier is the flagship company for the aerospace industry in Québec and Canada. Supporting it is necessary to maintain quality jobs in Québec. The government’s investment comes at a strategic time in the development of the C Series program and will reassure all stakeholders in Québec’s aerospace supply chain. Among others, maintaining manufacturing activities and Bombardier’s engineering services in Quebec will help spark renewed optimism among the industry, as well as among all the workers and students who are developing or want to develop in this sector.”
The bailout met with criticism Thursday, with Coalition Avenir Quebec leader François Legault saying the government behaved like a “schoolchild” in negotiating a “bad” deal, according to the Financial Post.
Parti Quebecois leader Pierre Karl Péladeau also criticized the deal, saying the government is, “preparing to make the citizens and taxpayers of Quebec take all the risks for the benefit of Bombardier shareholders,” the Financial Post reported.
But Quebec economy minister Jacques Daoust defended the move in an interview with the paper, saying he couldn’t take the chance of losing jobs and exports if the company failed on its own.
“Any investment like this is risky, but the risk not to do it is greater,” Daoust said.
“We’re helping Bombardier, of course, but we’re doing it for the industry as a whole.”
Bombardier will need to spend an additional US$2 billion before the production line begins to make money, and acknowledged the jet program won’t become profitable until 2020 or 2021 at the earliest, the Toronto Star reported.
Bombardier’s C Series program has struggled with delays and has only 243 firm orders, short of its goal of 300 by entry into service.
The company has said flight testing is nearly 97 per cent complete, with an assembly line in Mirabel, Que., working on production planes for its first customer, Swiss Air Lines.
But few major airlines have signed up for the plane, and news of the government bailout came with reports of weak third-quarter earnings. On an adjusted basis, Bombardier had net income of $2 million in the quarter, compared with $222 million for the same period a year ago, the Star reported.
Company CEO Alain Bellemare pointed to the fact Bombardier had multiple programs running in parallel when asked how things got so bad.
“That was very challenging for an organization of our size,” he said in the Star report. “The organization was overwhelmed by the number of programs. It is much different today.”
Bombardier is also scrapping plans to build the LearJet 85, a small, light aircraft with development plans that date to at least 2007.
But government help is seen as a necessity by some, and something that may provide some breathing room.
“This sector represents 70 per cent of total Canadian R&D (research and development) investments and a quarter of Greater Montréal’s aerospace workforce,” Aero Montreal said in the release.
“The Québec investment is therefore vital over the long term to ensure the region’s economic growth.”
