MONTREAL, March 17 (Reuters) - The Canadian government has finished studying a request from struggling planemaker Bombardier Inc for $1 billion in aid and is preparing to make an announcement within weeks, according to a source with direct knowledge of the situation.
Bombardier wants the money to help finance its new CSeries passenger jet, which faces tough competition from majors Airbus Group SE and Boeing Co.
The firm is based in Quebec, which last October invested $1 billion in the CSeries, and now both the company and the province want Ottawa to follow suit to help protect thousands of well-paid aerospace jobs.
“The due diligence is done. The government is preparing to make an announcement in a matter of weeks, not months,” said the source, who is familiar with the negotiations.
Bombardier formally asked for federal help on Dec. 11 and the two sides are still talking about what form possible aid could take, the source added.
Prime Minister Justin Trudeau was quoted last month as saying an announcement on Bombardier aid would be made before the March 22 budget. But Innovation Minister Navdeep Bains, who has direct responsibility for the file, on Monday said this was not the case, throwing the timing of the decision into uncertainty.
Asked for comment, Bains spokesman Philip Proulx said talks between the two sides were continuing.
“There has been progress in the discussions but a decision has not been reached,” he said.
A Bombardier spokeswoman declined to comment.
Senior government sources said last month that while Ottawa was very likely to offer some sort of aid to Bombardier, they did not like the way the $1 billion Quebec deal had been structured.
Quebec wants the CSeries project to be spun off into a separate entity, with Ottawa taking a one-third stake. This would take the troubled 100-150 seat jet program off the firm’s books and boost its short-term financial results.
The first of the CSeries jets is entering service in 2016 after years of delays. Bombardier has booked just 243 firm orders. It currently controls 50.5 percent of the CSeries, while Quebec has a 49.5 percent stake.
Under the Quebec proposal, if Ottawa did match the province’s $1 billion contribution, both governments would end up with a one-third stake in the CSeries with Bombardier left with the remaining one-third share.
Bombardier would have minority representation to the two governments on a separate CSeries board, sources told Reuters in February. (Editing by James Dalgleish)