PPRuNe Forums - View Single Post - Bombardier offers majority stake in C Series to Airbus
Old 20th Nov 2015, 04:58
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peekay4
 
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Yes, it is a concern, but governments are allowed to invest in companies, or to provide other forms of funding (such as some of those mentioned above).

The question is whether or not such funding is at "fair market value".

E.g., to keep things simple, let's assume Bombardier invested about $5 billion into the CSeries, then wrote down a $3 billion loss, implying the program's remaining value to be around $2 billion. Then Quebec's $1 billion investment into the program for 49.5% share does not seem out of line, and might not be considered an illegal subsidy.

Or, suppose the Canadian government agrees to provide $500 million in loan guarantees to Bombardier customers. That in itself is allowed, if the terms & conditions are reasonably in line with market benchmarks. However if the loan interest rate is far below market rate, for example, then there is a net benefit to Bombardier which may be considered an illegal subsidy.
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