Government Legault | Millions in the A220 to hope to remain a shareholder longer

By agreeing to inject a few hundred million more into the A220, the Legault government would like to allow the state to remain a shareholder in the program a little longer, according to information obtained by The Press. For Quebec, this would increase the chances of recovering some of its marbles.

Posted at 3:04 p.m.

Julien Arsenault

Julien Arsenault
The Press

The two partners of the Airbus Canada Limited Partnership (SCAC) are discussing because of a call for capital from the European giant. A 25% shareholder, Quebec has two options: inject new sums and maintain its stake at 25% or see it be diluted by opting for the status quo.

Investissement Québec (IQ) – the financial arm of the Quebec government – ​​could lengthen “more than 200 million”, according to the Montreal Journal. It was not possible to obtain details about the sum.

Discussions are still ongoing. Ottawa is not involved. Airbus declined to comment on Monday. From what we have learned, the Legault government would like to postpone the year in which the multinational can buy out Quebec’s participation in this program, which has already received 1.3 billion and is still in deficit. Profitability is not expected before 2025.

“To have a chance of recovering part of the investment, the objective is to postpone the moment of redemption,” said a government source who is not authorized to speak publicly.

Initially set for 2023, the takeover schedule was pushed back three years when Bombardier drew a line under the C Series adventure in February 2020.

At the helm of the program since 2018, without having had to pay a penny, Airbus is now a 75% shareholder. The sums that would be injected by the Legault government would be used to support the acceleration of the production rate – the element on which the multinational is betting to make the A220 profitable and reduce production costs.

The structure of the SCAC allows it to borrow on the markets, but if Airbus injects sums into the program, the State must follow suit if it wishes to avoid dilution.

Uphill

After the turmoil of the pandemic, which has been accompanied by a dearth of new orders, the A220 is destined for a bright future, believes aviation expert and lecturer at McGill University John Gradek. However, he wonders if the Legault government should untie the purse strings.

“As taxpayers, we can ask ourselves the question, says the specialist. Airbus has a very good product on its hands. But it looks like they want to increase production on the backs of Quebec rather than just investing their own money. »

According to the most recent report from the Economic Development Fund (FDE), the “fair value” of the investment was “nil” as of March 31, 2021. Since then, the A220 has started to regain altitude by accumulating orders.

In 2021, the aircraft obtained 64 firm contracts. Taking into account letters of intent and commitments, the total climbs to around 100 devices.

This could help increase government investment in the program. According to the FDE report, there was a “significant risk” last year of not recovering the full amount injected into the A220.

The production rate should soon increase to six devices per month, four in Mirabel and two in Mobile, Alabama. The rate should gradually be established at 14 aircraft per month. There are 497 aircraft to be delivered in the order book, representing several years of production.

Airbus eventually aims to offer a stretched version of the A220. It would be the third device of the family. This project has been rumored for several years. Last week, however, the aircraft manufacturer’s senior management indicated that there was no “imminent decision” in this matter.

2500

This is the Airbus workforce at Mirabel assigned to the A220. In Mobile, Alabama, there are 400 employees who assemble the aircraft.


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