Ottawa delivers $372.5M in loans to Bombardier
The federal government announced Tuesday that it would deliver $372.5 million in loans to Montreal-based plane and train maker Bombardier (BBDb.TO). The offering is much less than the US$1 billion the company originally sought from Ottawa. Still, the decision has been controversial.
Here’s some of the reaction from Canada’s business community:
“I think the company as a whole is still going to be there…I feel relatively bullish on Bombardier today – but again, they’ve got to really prove their worth on that CSeries program. Now is the time they’ve got to deliver additional orders” – Robert Kokonis, president, AirTrav
“I think the potential of the CSeries is extremely interesting… I think it’s part of life for an aircraft manufacturing company to receive some support in equity or loans from their governments. Personally, I think the reality is Bombardier specializes in business jets now they are moving towards commercial jets. This transformation needs cash, needs support…I think we should be proud as Canadians that the federal government is giving support to Bombardier – Michel Nadeau, chief director, Institute of Governance
“We have been pushing the government hard to say no to [Bombardier’s] request…we’re sad to see that the government, in our view, is wasting $372 million, but it’s certainly better than wasting $1.3 billion. Those who make arguments that this will be different this time will have to compare to their track record over the last 50 years, which is receiving a lot of money from taxpayers. – Aaron Wudrick, Federal Director, Canadian Taxpayers Federation
“Our party doesn’t believe in corporate welfare. Right now with what [Trudeau’s Liberals] are doing and what they are ignoring in here in Alberta, it’s just not fair. They should be concentrating here on making sure the unemployed get unemployment insurance benefits , that we cannot send signals to the marketplace … that would make investors very suspicious of putting their dollars in Alberta and Alberta oil, especially – Brian Jean, Wildrose Party Leader, to BNN
“Every little bit helps. [Bombardier is] facing a very difficult situation…It’s a step in the right direction. Will it guarantee that they make it through these difficult times? The jury is still out on that. Hopefully they will be able to, it’s just a question of execution and the broader top line market” – Richard Aboulafia, VP of Analysis, Teal Group, to BNN
"From an ‘all-of-Canada’ perspective, we want to see our aerospace industry flourish. But this is another example of squeaky-wheel politics – reacting to powerful voices -- and in this case only serves to encourage frustration in industries and regions, equally deserving of opportunities to flourish, but which do not get the ear or attention of politicians. Bombardier is not the only example, just the most recent one. It is reactive politics. Our governments, federal and provincial, must focus much more on establishing the basic principles of engagement with industry. We say we don’t want to pick winners or losers, but then that’s exactly what we do. We say we don’t want to give preference to one region over another, but then we do just that. Establish basic principles of engagement, then abide by them – even better, be proactive. The Economic Advisory Council is recommending some things that could help significantly in this regard." -- Martha Hall Findlay, President and CEO, Canada West Foundation, in a statement to BNN
"We’re a free-enterprise organization and we’ve never benefited ourselves from government bailouts. In principle, that’s a bit of a sticking point to us. That said, Bombardier is a great supplier to us. They are a great Canadian institution and I’m pleased they are going to have the financial support to keep going...We are not a CSeries customer. I don’t think our position changes as a result of this loan." – Gregg Saretsky, CEO, WestJet, on BNN
“My whole point about Bombardier, though, is here we are, the economy is roaring, airline travel is booming – especially overseas. You have Boeing’s stock at an all-time record high, doing amazing. Bombardier just completely missed the boat. I think the government is throwing good money at a bad project. Mismanagement. Mis-marketing. It’s just not a good situation. And family dynamics aside, I just don’t think this is the right company that the Canadian government should be propping up – Barry Schwartz, Chief Investment Officer, Baskin Wealth Management, on BNN
“The subsidies that the Canadian company has already obtained and continues receiving from the Canadian government have not only been fundamental in the development and survival of the CSeries program, but have also allowed Bombardier to offer its aircraft at artificially low price. It is essential to restore a level playing field to the commercial aircraft market and ensure that competition is between companies, not governments.” – Paulo Cesar Silva, CEO, Embraer, via press release
“All the other plane buyers around the world now see the federal government as not necessarily backstopping, but partnering with Bombardier going forward – and that will give them, at least the guys that are on the bubble, a little bit more incentive or confidence to go out and place [CSeries] orders.” – Gerard Ferguson, CEO, Portfolio Manager, J2 Capital Management Inc.
“The Americans do it with Boeing. The Europeans, absolutely, with Airbus. The Brazilians, the Japanese, the Chinese do it. So if you want to play in the big leagues, you’re going to get government support. Now, we can argue how much government support -- and that’s a fair point. But if Canada wants to play here, welcome to the big league.” – Karl Moore, professor of business strategy, McGill University, on BNN