Quebec is reacting positively to its decision of supporting Bombardier Inc with $1-billion lifeline. Quebec says its decision wouldn't attract any trade dispute from the competitors of Canadian airline.
The Quebec government has firmed up the plan to invest $1 billion in Bombardier's CSeries jets and in turn, it'll take 50 percent stake in the ailing jet maker. Industry observers feel that the support of Quebec may trigger protest from Brazil's Embraer, which has been raising voice against any such support to Bombardier.
Quebec is a French-speaking province in eastern Canada. The government sees there's no reason to worry about its support to Bombardier. Quebec's aviation industry is highly linked with Bombardier's performance as 18,000 workers are employed in the province.
Bombardier's revival and recovery will also help smaller vendors and suppliers in the Quebec province. Embraer has already lodged complaints against the government support to its rival Bombardier and CSeries project.
Quebec Finance Minister Carlos Leitão said, "We have structured this as a separate company and a limited partnership between the government and Bombardier. This is well within permitted standards because it is not a subsidy. It is an equity participation."
Leitão was speaking to media on the sidelines of the P3 2015 investment conference in Toronto.
The aviation industry observers feel that the financial support to the struggling Bombardier is likely to be risky proposition for Quebec province.
There's also increasing opposition over the state capitalism as Quebec province will become part owner in Bombardier.
Bombardier's efforts to get private investment from the industry majors couldn't yield results. The airline had approached Airbus, Boeing and other manufacturers as well.
Airbus has commenced a Euro1-billion share buyback program recently. Airbus and Boeing have aircraft similar to CSeries. Moreover, Aircraft Corporation of China has launched a jet plane competing with CSeries. There's increasing competition to CSeries before the project takes off.
Bombardier accounts for 40,000 jobs including direct and indirect employment in the Quebec province. The workers in the Quebec province receive salaries from Bombardier almost twice the local average.
The finance minister of Quebec province also said Bombardier didn't approach the federal government for monetary support.
Bombardier is also considering several options for raising money and selling a stake in the company and minority stake in the rail division.
CSeries line of aircraft from Bombardier is a direct competitor to Boeing's 737 plan and Airbus Group's A319 and A320 jets. The CSeries project of Bombardier has been delayed owing to several reasons including lack of funds. Bombardier has a debt burden of over $9 billion.
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