Canada lending Bombardier more cash

The Global 7000 first flight test vehicle has successfully transferred to the Bombardier Flight Testing Center in Wichita ahead of schedule. The program’s flight validation is progressing well with five additional flights completed since the historic first flight on November 4, 2016.

Canada has agreed to lend Bombardier C$372.5 million ($282 million) to help it continue to develop the C Series and its Global 7000 business jet. The government’s support is not a surprise but the amount is.

First, Bombardier asked for $1 billion last year but now seems confident that it needs a lot less. Second, in manufacturing C$372 million is not a lot of cash – it is roughly four C Series aircraft (at list price). The four year interest free loan may be attractive for the OEM (which is using two thirds for the business jet programme) but it is going to create a lot of hassle for the government. Brazil has already said it will challenge the Canadian government at the World Trade Organisation.

“I am very much prepared to defend what we are doing tonight,” said Francois-Philippe Champagne, Canada’s trade minister. He no doubt means this but is $370 million really worth the tedium of a World Trade Organisation dispute.