Bombardier Stock: Will This Be Enough to Save Bombardier, Inc.?

Enough to Save Bombardier

The drowning Bombardier, Inc. (TSE:BBD.B) is getting a helping hand from Quebecers, as the rest of Canada keeps its arms folded. The French-speaking province is mulling a further investment in the “jewel” of its economy, thus Bombardier stock can breathe air instead of water.

Earlier this week, the plane and train maker received strong support from Quebec’s transportation minister, Jacques Daoust.

Speaking to the provincial parliament in Quebec City, Daoust said he would be willing to assist Bombardier once again if Canada’s federal government failed to invest in the Montreal-based company by the end of next month.

“If as of March 31, the federal government isn’t there, the Government of Quebec will have a decision to make,” he said. “We’ve always supported Bombardier. It’s a jewel of our economy, and we will continue to support the company.” (Source: “Quebec eyes fresh Bombardier aid absent federal investment,” The Globe and Mail, February 10, 2016.)

In October, Quebec agreed to invest CA$1.0 billion in Bombardier’s “C Series” program to add to the funding for the beleaguered jet and ease any customer concerns. Daoust has since said that the eastern Canadian province is seeking an equivalent commitment from Ottawa.

Bombardier is more than two years late and about CA$2 billion over budget with the C Series, the biggest jet program it’s ever undertaken. The aircraft, which can seat up to 160 people, is expected to enter service this year.

Daoust told his fellow provincial lawmakers this week that Federal Innovation, Science and Economic Development Minister Navdeep Bains is “very receptive” to the idea of assistance to Bombardier.

“I’m quite hopeful that in the next few days there will be an announcement on the federal side,” he said. (Source: Ibid.)

But Justin Trudeau’s federal Liberal government is reluctant to move to invest in the ill-fated program, which has not had a new order in more than a year.

Stefanie Power, a spokeswoman for Bains’ department, wrote, “The federal government is engaged in a dialogue with Bombardier to better understand the company’s situation and priorities and is working towards a timely decision. There has to be a strong business case for making a federal investment. Any assistance would have to be in the best interest of all Canadians.” (Source: Ibid.)

Earlier this week, the chief executive officer of WestJet Airlines Ltd. (TSE:WJA), Gregg Saretsky, described the C Series as “too small” for the Canadian market. He also told the local media that he is in talks with the Quebec company to slow down the remaining deliveries of his “Q400” turboprops order. WestJet has ordered 36 Q400s, 25 of which have been delivered.

Bombardier stock (TSE:BBD.B) is in the gutter. It’s currently trading below CA$1.00, plunging from above CA$7.00 five years ago. BBD.B stock, which touched an all-time low of CA$0.72 on February 8, is at risk of being kicked out of major Canadian indexes.

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