MONTREAL (Reuters) - Canada’s 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 Europe’s Airbus Group SE and the United States’ Boeing Co.
The company is based in Quebec, which last October invested $1 billion in the CSeries, and now Bombardier and the province want Ottawa to follow suit to help protect thousands of well-paid jobs.
“The due diligence is done,” the source said. “The government is preparing to make an announcement in a matter of weeks, not months.”
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 told Bloomberg Television on Thursday that the CSeries was a “fabulous” plane and cited what he said was significant support planemakers Airbus, Boeing and Brazil’s Embraer SA received from their respective governments.
Pressed on the timing of a possible announcement about aid, he replied: “We’re taking our time ... to make sure we’re doing the right thing in the interests of the Canadian industry and high-quality jobs” as well as respecting taxpayers.
A spokesman for Innovation Minister Navdeep Bains, who has direct responsibility for the file, said talks between the two sides were continuing.
“There has been progress in the discussions, but a decision has not been reached,” he said.
Separately, the Globe and Mail on Wednesday said Ottawa had tapped Morgan Stanley to advise it on the matter. Bombardier and Morgan Stanley declined to comment.
Senior government sources say that while Ottawa is likely to help Bombardier, it dislikes how the $1 billion Quebec deal was structured.
Quebec wants the CSeries to be spun off into a separate entity, with Ottawa taking a one-third stake. This would remove the 100-150 seat jet program from the company’s books and boost its short-term financial results.
The first CSeries jet will enter 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 Quebec’s proposal, if Ottawa matches the province’s $1 billion contribution, both governments would own one-third stakes in the CSeries. Bombardier would have the remainder.
Additional reporting by Leah Schnurr in Ottawa; Editing by James Dalgleish and Lisa Von Ahn