Exclusive: Quebec proposes curbing Bombardier control of new jet program - sources

Wed Feb 24, 2016 8:32pm EST
 
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By Allison Lampert

MONTREAL (Reuters) - A proposed bailout of aircraft maker Bombardier Inc (BBDb.TO: Quote) could give the Canadian and Quebec governments control of a separate board for the new CSeries jet program, eroding the influence of the company's founding family, two sources familiar with the matter said.

Bombardier has struggled to launch the CSeries, with years of delays and cost overruns roiling the Montreal-based company. It wrote down the value of the 100-150 aircraft program in October, sold a stake in its rail business to Quebec's pension fund and got a $1 billion lifeline from the Quebec government.

The proposal from the Quebec government would give it two seats and the federal government two seats - provided the latter matched the province’s $1 billion invested in the company - on a seven-person board for the CSeries program. Bombardier itself would only be able to nominate three of the seats, putting the company's representatives in a minority, one of the sources said.

The federal government is under pressure from Quebec, which took a 49.5-percent stake in the CSeries in return for its investment, to financially support the planemaker, which employs about 18,000 in Quebec's aerospace sector.

On Friday, senior government sources said the federal government will also likely offer up to $1 billion in aid. But some in the country's ruling Liberal party are pushing for the company to make tough concessions around control of Bombardier Inc, such as a change to its dual-class structure which has helped the Bombardier-Beaudoin family to control the company.

Prime Minister Justin Trudeau said this month that Ottawa would announce a decision on financial support before the federal budget on March 22.

"Think of it like a subsidiary," said one of the sources, referring to the CSeries board proposal.

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