EXCLUSIVE-Bombardier to book major writedowns, outline cash infusion from Quebec-sources
(Adds details on Airbus, analyst comment, background on business jets)
By Andrea Shalal and Allison Lampert
WASHINGTON/MONTREAL Oct 28 (Reuters) - Canada's Bombardier is set to book a writedown on its CSeries program and announce that the government of Quebec will be investing in the narrowbody jet program, according to several sources familiar with the matter.
The embattled Montreal-based company will also permanently mothball its Learjet 85 program, the sources said.
Bombardier, which has been looking at a wide range of options to help it fund its long-overdue and over-budget CSeries jet program, will form a joint venture with the Quebec government on the CSeries, said the sources, who asked not to be named as they were not authorized to discuss the matter.
To form a joint-venture, Bombardier will write down billions of dollars it has already sunk into the CSeries, said the sources. If a deal is reached, the government would be on the hook to fund half the final development costs on the new jet, which is slated to enter service next year.
A Bombardier spokeswoman declined comment. A spokeswoman for Quebec's economy minister was not immediately available for comment.
A similar deal with European aircraft giant Airbus Group SE fell apart earlier this month when news of the talks leaked.
In a note to clients on Tuesday, Sterne Agee analyst Peter Arment noted that CSeries program development costs have already topped $5 billion and he expects that another $2 billion in cash will be required to finish certification and absorb the ramp in production in the first three years. Continued...