Bombardier to book writedowns, get cash from Quebec: sources | Reuters
WASHINGTON/MONTREAL (Reuters) - Canada's Bombardier (BBDb.TO) is set to book a writedown on its CSeries program and announce that the government of Quebec will be investing in the narrowbody jet program, according to several sources familiar with the matter.
The embattled Montreal-based company will also permanently mothball its Learjet 85 program, the sources said.
To form a joint-venture, Bombardier will write down billions of dollars it has already sunk into the CSeries, said the sources. If a deal is reached, the government would be on the hook to fund half the final development costs on the new jet, which is slated to enter service next year.
A Bombardier spokeswoman and Quebec's economy minister Jacques Daoust both declined to comment.
A similar deal with European aircraft giant Airbus Group SE (AIR.PA) fell apart earlier this month when news of the talks leaked.
Bombardier and its Brazilian rival Embraer S.A. (EMBR3.SA) vie for title of the world's third-largest civil aircraft maker behind Boeing Co (BA.N) and Airbus Group SE (AIR.PA). The Canadian company is the world's only manufacturer of both trains and planes.
In a note to clients on Tuesday, Sterne Agee analyst Peter Arment noted that CSeries program development costs have already topped $5 billion and he expects that another $2 billion in cash will be required to finish certification and absorb the ramp-up in production in the first three years.
That would mean Quebec would potentially front $1 billion or more in order to fulfill its side of the deal.
Quebec's government has repeatedly said it will support Bombardier and its 18,000-strong workforce in the province.
The stock was last up 12 percent at C$1.62.