Boeing and Airbus Group SE competitor Bombardier Inc. is getting a little boost from the Canadian government for funding of its two jet programs. One of the programs will include Bombardier’s C Series single-aisle plane that already is up for competition with Boeing and Airbus jets. The Canadian government says it will give C$372.5 million ($282 million) toward the programs.
Canada says it expects that at least a third of what is called “repayable program contribution” will be going toward the C Series program. The rest of the money, which will be given out over a span of four years, will be for the Global 7000 business jet. Not only is the money interest-free but will provide thousands of jobs in Canada.
The help the Canadian government is providing works adds to money that Bombardier seemed to fall short. Bombardier initially went on the search for at least $1 billion over a year ago. Many obstacles stood in the way of the company obtaining the correct amount of funds. Bombardier experienced production delays and cost overruns when dealing with its C Series project initially.
In the beginning, the $1 billion that Bombardier sought was pitched by the providence of Quebec. The Prime Minister wanted dual-class share structure which would allow it to basically control the firm without being a majority stakeholder. Bombardier dismissed this offer, however.
Bombardier seemed to gain confidence in fulfilling its project after sales went out to Air Canada and Delta Airlines back in 2016. Now the company hopes to increase the amount of sales it gets on its Global 7000 which is currently the largest business aircraft the company produces.
Yet some analysts believe that the C$372 million that the Canadian government is providing won’t even be a dent in the bucket “for a company that has more than $1 billion in capital expenditures annually,” says Chris Murray, analyst from AltaCorp Capital.
Yet Bombardier believes that the money will help the company with new jet developments, but the company wasn’t specific as to what type of jet it would come out with to stand along-side the Global 7000.
The Global 7000 is the company’s largest jet and recently just took flight last year. It has been a large contribution to the company’s success and is due to enter service sometime around the end of 2018. That is compared to the C Series which came out about two years late when it debuted at Deutsche Lufthansa AG’s Swiss International back in July. Even though it was initially $2 billion over budget, the C Series has been doing better for the company.
When it comes to the budget, Bombardier hasn’t announced an actual date yet though sources believe that it could begin sometime this month. The combines airplane projects will provide an estimated 5,000 jobs. However, the company did say that its acquired debt, due sometime 2019 and 2020, totals an estimated $1.45 billion.
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