800x600_1448383668_Airbus-A320neo-VMU_tests (1)-1.jpg Bombardier

Canada Treads Softly with Bombardier Funding

Despite ongoing accusations concerning unfair state aid, Bombardier is to receive an extra US$282 million from the Canadian government.

The deal, announced today (February 8), follows last year’s US$1 billion investment in the CSeries program by the government of Quebec.

“This contribution from the Government of Canada will secure the highly skilled, well-paying jobs for middle-class Canadians who work in the aerospace sector. It will also ensure that Canada has a strong, stable and competitive aerospace industry, which is a major driver of economic activity and innovation across the country,” said Navdeep Bains, Canada’s minister of innovation, science and economic development.

Quebec’s investment infuriated Bombardier’s competitors, and Brazilian manufacturer Embraer threatened to take its complaints to the World Trade Organization. Embraer was particularly annoyed by an order for 75 CSeries aircraft from Delta, which it thought Bombardier was able to offer at below cost price because of Quebec’s funding.

Seen in this light, the latest taxpayer package seems like a highly antagonistic act, yet it could be just the opposite.

Two weeks ago the Brazilian and Canadian trade ministers sat down to discuss state support for Bombardier, and both indicated they were happy with the result. This might seem curious given today’s news, but one should remember that Bombardier had been angling for US$1 billion of federal funding to match Quebec’s contribution.

Instead, the aircraft manufacturer will receive roughly a quarter of that, while only a third of the new funding – or about US$95 million – is destined for the CSeries, according to a Reuters source.

The rest will go to the Global 7000 business jet, which Embraer doesn’t produce a direct competitor to.

Keen to stress that the new funding is a loan rather than a grant, Bombardier also repeated the word “repayable” five times in its press release.

Of course, Airbus’ repayable loans did little do assuage Boeing’s ire, but Embraer and Bombardier do seem, for the moment, less inclined to repeat the years of tortuous trade litigation that the bigger airframers embroiled themselves in.

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