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Ottawa completes probe of Bombardier aid: Report

bombardiercseries
Tags: Bombardier

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, a source with direct knowledge of the situation Reuters. 

Bombardier wants the money to help finance its new CSeries passenger jet, which faces tough competition from Airbus Group SE and Boeing Co.

The company is based in Quebec, which last October invested $1 billion in the CSeries, and now both Bombardier and the province want Ottawa to follow suit to help protect thousands of well-paid aerospace 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 was quoted last month as saying an announcement on Bombardier aid would come before the March 22 budget. But Innovation Minister Navdeep Bains, who has direct responsibility for the file, said on Monday that 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.

Separately, the Globe and Mail reported on late on Wednesday that the federal government had tapped Morgan Stanley to advise it on Bombardier's aid request.

Bombardier and Morgan Stanley declined to comment.

Senior government sources said last month that while Ottawa was likely to offer some sort of aid to Bombardier, they did not like the way the $1 billion Quebec deal was structured.

Quebec wants the CSeries venture 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 company'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 Quebec's proposal, if Ottawa matches the province's $1 billion contribution, both governments would own one-third stakes in the CSeries, with Bombardier left with the remainder.

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