Bombardier Seen Ceding C Series Control If Canada Investsby
Planemaker in talks with federal government over investment
Delays in jet's development have sapped company's finances
Canada and Quebec would control Bombardier Inc.’s troubled C Series jet program through an expanded board if the federal government joins the provincial counterpart in investing in the venture, Quebec Transport Minister Jacques Daoust said.
Quebec agreed in October to pay $1 billion for a 49.5 percent stake in the C Series, which is behind schedule and has cost Bombardier about $5.4 billion. The company is now negotiating with the federal government over a similar commitment. Quebec wants to close its own transaction by March 31.
Under the terms of the October agreement, Quebec would get two seats on the board of a new partnership, C Series Inc., compared with three for Bombardier -- which gets to name the chairman. An additional investment by Canada would give the federal government the right to name two directors, Daoust said.
“If we had a new player joining us, we could imagine having seven board seats,” Daoust told Canada’s Ici RDI television in an interview Thursday. “The new partner and us would control the company. This is certainly a scenario that is being explored now, because we couldn’t imagine investing two-thirds of the funds and having a minority on the decision-making front.”
Bombardier is more than two years late and about $2 billion over budget in developing the C Series, its biggest ever jet program. The aircraft, intended to crack the Boeing Co.-Airbus Group SE duopoly in single-aisle commercial planes, can seat 108 to 160 people, a step up in size from Bombardier’s signature regional aircraft.
Alain Bellemare, Bombardier’s chief executive officer, told analysts Feb. 17 that the C Series will need about $2 billion in additional financing before the program can start generating cash flow around 2020. Isabelle Rondeau, a Bombardier spokeswoman, declined to comment Thursday on Daoust’s comments.
Any deal with Canada would likely include a call option allowing Bombardier to buy out the federal government at a later date, mirroring the company’s agreement with Quebec, Bellemare said last week. Bombardier has said Daniel Johnson, a former Quebec premier who sits on the company’s board, would serve as chairman of the C Series.
Innovation Minister Navdeep Bains, who is responsible for the file in Ottawa, said Tuesday the federal government hasn’t yet made a decision on Bombardier.
While Quebec expects the federal government to commit to the C Series, the province needs to be ready in the event that Canada decides not to invest, Daoust said.
“We need an additional partner,” Daoust told reporters Monday after a speech in Montreal. “We would very much like this partner to be the federal government, and I think there is a lot of pressure on the government now. If I don’t get this partner, I will have to see with Bombardier how I can close the deal differently.”