The federal government has brought in advisers, including an American investment bank, to help analyze the feasibility of a $1-billion (U.S.) aid package to aerospace giant Bombardier Inc.
"We have hired outside consultants to help us," a senior government official told The Globe and Mail. "They are looking at due diligence, of course, and what would be the nature of the deal that we could put forward."
The official would not disclose the names of the consultants. However, sources said the government has retained Wall Street investment bank Morgan Stanley to advise on the Bombardier aid.
Montreal-based Bombardier is seeking up to $1-billion from the federal government as an investment for its C Series airliner, a new family of technology-packed planes seating 100 to 160 people that the company is counting on to fuel revenue over the next 25 years. Late to market and more than $2-billion over budget, the C Series is nevertheless considered one of Canada's biggest recent industrial achievements.
The government and Bombardier said negotiations are still ongoing and there will not be an announcement on an aid package until after the March 22 federal budget.
"It is a complete separate track. It will be separate from the budget," said the federal official, who explained that it would be difficult to book money in the budget when a deal has not yet been completed. "It's not like we can put it in the budget and we know how much it is going to be and we are going to hand it to you. … And when the outcome is going to be dependent on negotiations with the company, so if we were to put that in the budget, we would be dictating the outcome."
MP Alex Nuttall, Official Opposition Critic for FedDev Ontario, opposed the decision to hire U.S. consultants. "The Liberals are so concerned with keeping information about a Bombardier bailout from Canadians that they are outsourcing the analysis to an American company. This is consistent with the Liberals' vote against transparency at Industry Committee and their continued blockade of information regarding the bailout."
Bombardier spokeswoman Isabelle Rondeau declined to comment.
Montreal-based Bombardier remains optimistic that Ottawa will provide financial assistance, although it has received no firm indication from the government that such aid is a certainty.
"Given the tenor of the discussions" and the fact the discussions continue, things look good, said one person familiar with the talks. That does not mean that a deal is guaranteed, the person cautioned.
In an interview with Bloomberg News on March 3, Prime Minister Justin Trudeau praised the C Series airliner, saying it is a superior plane that his government wants to become a national triumph.
"You look at everything people have written about it, it's going to be an extraordinary airplane," Mr. Trudeau said. "So our question is very much, well, how do we make sure that airplane is a success and how are we making sure it is a Canadian success story?"
Quebec has already pledged a $1-billion investment in the C Series, obtaining a minority stake in the aircraft program. If Ottawa decides to join, there would probably be a three-way equity partnership. Bombardier would probably have the option to buy back the governments' stakes after a certain number of years.
Winning an investment from Ottawa would provide a psychological push for Bombardier, by showing prospective customers that the national government stands behind the company and its flagship product.
It would also strengthen its balance sheet during early production and give it more power to get aggressive on pricing. Bombardier has lost at least one major sales campaign recently to rival Boeing Co., which offered United Airlines a deep discount to prevent Bombardier from gaining a toehold with the U.S. carrier.
Bombardier took a $3.2-billion impairment charge on the C Series program last year and has said it will need $2-billion more to bring the plane to cash-flow break-even in 2020-21. If Ottawa declines to fund the program, the company would have to look elsewhere for the remaining $1-billion.