Bombardier Inc. summoned two Quebec opposition leaders to its Montreal headquarters to help clear up any confusion about its C Series aircraft program, saying the heated debate on its future taking place across Canada is being used by rivals to undermine its sales efforts.
Management for the plane and train maker invited Coalition Avenir Québec Leader François Legault to its head office last Friday and met with Parti Québécois Leader Pierre Karl Péladeau Monday. The two politicians, both former business executives, have been critical of the $1-billion (U.S.) investment deal Quebec signed with Bombardier for its C Series program, arguing that taxpayers are being had. The federal government is mulling a request for a similar-sized investment in the company.
“There has to be a debate” about public aid for the plane maker, acknowledged John Paul Macdonald, Bombardier’s senior vice-president in charge human resources and public affairs. “We just think it’s important that the people who are involved in these debates have the opportunity to hear directly from us and from [chief executive officer] Alain Bellemare about what the situation is.”
Mr. Macdonald characterized the meetings as part of a regular outreach with stakeholders that Bombardier does on important issues. But the fact that the vice-president is speaking out personally to media while normally staying behind the scenes suggests the company has become uneasy about what’s being said in the wake of the Quebec deal and an order for up to 75 C Series planes from Air Canada. Bombardier also announced 7,000 layoffs, including 2,400 in Quebec, earlier this month as part of a corporate restructuring effort.
“The Premier is like a little fish facing sharks in the negotiations with Bombardier and Air Canada” Mr. Legault said in a Feb. 25 statement, adding that Quebec has to demand job guarantees as part of its investment and needs to renegotiate the agreement. He said that nothing in his meeting with Bombardier’s CEO changed his mind on the matter.
“This deal is not a good one and it won’t get better,” Mr. Péladeau said Monday after his own meeting with Mr. Bellemare, adding that Quebec should have invested in Bombardier Inc. and not just in the C Series. “The Premier is responsible for this chaos.”
Bombardier says it has no plans to renegotiate the deal with Quebec, which gives the province a 49.5-per-cent stake in a new limited partnership holding the assets of the C Series program and warrants for up to 200 million subordinate voting shares at a strike price of $2.21 (Canadian). And it says it will not commit to a guaranteed employment level. The company maintains that Quebec has invested in the right place, saying the C Series represents the future of Bombardier and of Canada’s aerospace industry.
Implementation of the letter of intent with the province and the carving out of the C Series program are progressing well and expected to be completed in the second quarter, according to Bombardier spokeswoman Isabelle Rondeau. The deal is key for the company, representing half of the $2-billion (U.S.) required to bring the C Series program to projected cash flow break-even in 2020-21.
Bombardier shares rose 4 per cent to $1.10 (Canadian) Monday. They’ve gained 22 per cent since Bombardier announced the Air Canada order on Feb. 17.
Mr. Macdonald said the discord taking place in Quebec’s legislature, combined with negative commentary about the company in mainstream media, is being used by Bombardier’s competitors to try to influence prospective customers about its survival prospects.
To some extent, that’s always been the case. But recent aircraft order wins by both Boeing and Airbus have shown that Bombardier’s rivals are being extremely aggressive in their bid to block the 100- to 150-seat C Series from getting a significant toehold with certain airlines.
“They used every opportunity they can get to inject a tone of instability into our [sales] campaigns,” Mr. Macdonald said of the competitors. “That’s a fact.”
Despite increasing pressure from Quebec business leaders and lawmakers in recent weeks, the federal government has given no indication about when it plans to announce a decision on Bombardier. There is opposition to such aid in many corners of Canada, including in Alberta and Saskatchewan, by people who argue that the country’s energy sector also deserves significant help.Report Typo/Error