More than 2 billion in public funds | The C Series mechanism

More than $2 billion in public funds later, Quebec will remain a shareholder in the former C Series until 2035. With a reinjection of CAN$410 million (US$300 million), the Legault government is buying time in the hope of recovering some of its marbles, while the A220 is struggling to get out of the red. It is also the most recent chapter in a saga that dates back to 2015. Overview.

The beginnings

Philippe Couillard’s Liberal government came to the rescue of Bombardier – on the verge of bankruptcy – in October 2015. How? It injected $1.3 billion in exchange for 49.5% of the C Series, still in development. To save Bombardier and the program, the Couillard government put the finger of Quebec taxpayers in the cogs. In opposition, CAQ leader François Legault criticized the move – he would have preferred the investment to be made in Bombardier as a whole – but agreed with the idea of ​​helping the Quebec aircraft manufacturer in a turbulent zone. “We share the risks, but also the long-term profitability,” said the Minister of the Economy at the time, Jacques Daoust. Nine years later, there are still no profits on the horizon.

Airbus is coming

Without spending a cent, Airbus takes control of the C Series on 1^er July 2018 and renamed the aircraft A220. “We would have dreamed that Bombardier would become as big as Boeing and Airbus, but in practice, it couldn’t happen,” justified Prime Minister Philippe Couillard, when this transaction was announced in October 2017. The years went by and Bombardier’s finances continued to deteriorate. A dismantling of the conglomerate, which would lead to a repositioning towards business aviation, was looming. The C Series adventure ended in the winter of 2020 for the Quebec aircraft manufacturer, which left Airbus (75%) and Quebec (25%) as partners in the limited partnership that owned the A220. At that time, the Legault government still claimed that it would be possible to recover the $1.3 billion in public money.

A first bailout

Airbus is succeeding in boosting sales, reducing costs and accelerating the production rate. However, this is not enough. The A220 continues to lose money. It is by producing more planes – 14 per month – in Mirabel and Mobile (Alabama) that the program will get out of the red, says the multinational. Pressing the accelerator comes with a hefty bill: 1.5 billion. Co-owner of the program, Quebec injects 380 million in the winter of 2022 and pushes back to 2030 the deadline by which Airbus will be able to buy back its stake. “It’s an investment, not a subsidy, we are confident of making a profit,” Mr. Legault then said, two years after saying that he had no intention of putting money back into the program. Otherwise, the chances of “making profitable” the government’s participation would have been “non-existent,” Quebec justifies.

All or nothing

2024. What was the money used for? To add staff – some 1,600 people in two years in Mirabel – and tools, such as a pre-assembly line, as well as to build new hangars to free up space inside the plant, where the A220s are assembled. It won’t be until 2026 that the former C Series will reach the cruising speed that should allow it to generate profits. Result: the two partners are getting out their checkbooks. The bill is approximately $415 million for Quebec and $1.2 billion for Airbus. “If we didn’t invest today, the [380 millions] “The 2022 investment would disappear because there would have been a dilution,” defended the Minister of Economy and Innovation, Pierre Fitzgibbon, at a press conference on Tuesday. The investment comes with a condition.

The following

The latest reinvestment comes with a condition: Mirabel must account for two-thirds of the A220 workforce. The other assembly line is in Alabama. Is this the last such effort? “Management [d’Airbus] does not anticipate that there will be further investments, said Mr. Legault. Obviously, we do not want that.” By loosening the purse strings, Quebec is pushing back by five years, to 2035, the date when it will be bought by Airbus. “The further we go, the less the risk,” believes the premier. Everything indicates that Quebec will not recover everything it has invested since 2015. The Legault government is confident about its two injections ($795 million). As for the $1.3 billion from Philippe Couillard’s Liberal government – ​​an investment already written off by the state – the chances are slim, agreed Mr. Fitzgibbon.