Canada likely to aid struggling Bombardier: government sources

Fri Feb 19, 2016 4:46pm EST
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By David Ljunggren

OTTAWA (Reuters) - Canada will likely offer up to $1 billion in aid to ailing plane maker Bombardier Inc (BBDb.TO: Quote), according to senior government sources, though some in the ruling Liberal Party want to see the company make tough concessions around control.

The federal government is under enormous pressure from the province of Quebec, which last year invested $1 billion in the firm's CSeries passenger jet for a nearly 50 percent stake in the project.

Bombardier acts as the center of the aerospace industry in Quebec. Although the CSeries is billions of dollars over budget and years late, not helping the firm would cost the Liberals support there.

"It is very, very likely the government will step in but the details still need to worked out," said one person with knowledge of the file.

Bombardier wants the federal government to follow the example of Quebec and take a stake in the CSeries, though it is not clear how big.

In public, federal cabinet ministers have stressed the importance of the aerospace sector, with Treasury Board Minister Scott Brison saying on Friday the Liberals would continue to invest in the industry.

But sources say Ottawa is concerned about Bombardiers's dual class share structure, which gives the Bombardier-Beaudoin family a roughly 54 percent voting stake.

Amid vocal criticism of Bombardier's management some Liberals have suggested the company could dilute or even scrap the dual class structure, thereby making it more accountable to investors. Bombardier has hitherto rejected this idea and there is no guarantee the firm would change its mind under pressure from Ottawa, setting up a potential standoff.   Continued...

A Bombardier aircraft is displayed at the Singapore Airshow at Changi Exhibition Center February 18, 2016.  REUTERS/Edgar Su