Quebec bails out Bombardier over CSeries jet troubles
Aerospace giant Bombardier, which employs 5,500 people in Belfast, is to receive a US $1 billion cash injection from a Canadian provincial government for its beleaguered CSeries programme.
The wings of the narrow-body jet are made in Belfast in Northern Ireland's biggest-ever inward investment programme, worth £520m.
But sales of the CSeries - a challenger in a market dominated by Airbus and Boeing - have been disappointing, with just 243 sold instead of the projected 300.
The project has been delayed by around three years and is also around £1bn over budget.
But under the new deal the Government of Quebec, where Bombardier is based, will exchange $1bn (£655m) in return for a 49.5% stake in a limited partnership to complete the CSeries programme.
And the deal also brings a pledge from Bombardier to maintain the CSeries operations in the Canadian province for the next 20 years. At its peak, the CSeries wings project in Belfast was expected to employ 800 workers. It's understood only 300 are currently at work on the project.
DUP MP Gavin Robinson - whose East Belfast constituency is home to Bombardier's main operations - welcomed the news of the cash boost. He said: "It is good news for Belfast and all of us who want to see this aircraft baiinto service as soon as possible."
A statement from Bombardier said: "The investment was negotiated between Bombardier and the Government (of Quebec) at arm's-length and will not materially affect control of Bombardier." The firm also announced it was stopping its Learjet 85 programme, which it suspended in January this year, due to lack of sales, though that will have no impact on jobs in Northern Ireland. Alain Bellemare, president and chief executive of Bombardier, said: "The market is there, our leadership is in place, we have the best product and with the support of the Government (of Quebec) we are ready to make this aircraft a commercial success."
PwC Northern Ireland chief economist Esmond Birnie said government cash injections were nothing new for the aerospace sector.
"Large scale government interventions in terms of launch aid for research and development of new aircraft types and/or loans are common in the aerospace sector, primarily because the immense costs associated with the development of a new civilian airliner," he said.
"Airbus receives State assistance within the EU, while Boeing may be informally or indirectly subsidised given the scale of defence contracts the company has with the US Federal Government."
Dr Birnie said Bombardier had received grants of up to US $300m (£196m) from the Canadian Government to cover research costs from 2008.
And after 1996 the Quebec Government had provided Can $2.3bn (£1bn) in commercial loans relating to the CRJ regional jet, Dr Birnie said.
Bombardier also revealed third quarter results, suffering a total net loss of US $4.9bn (£3.2bn), of which $3.2bn (£2bn) was related to the over-budget CSeries programme.