loading...

13 February 2020 04:56

Bombardier Inc. Belfast Bombardier Inc.

Bombardier to make a ‘positive’ announcement this week, says Quebec economy minister

Quebec Economy Minister Pierre Fitzgibbon hinted Bombardier Inc.'s upcoming financial results will contain positive news for the province. Bombardier is scheduled to report fourth-quarter results Thursday before stock markets open. News reports out of Europe have the company involved in parallel discussions to sell its minority holding in the Airbus A220 joint venture, as well as its controlling stake in the Berlin-based Bombardier Transportation rail equipment division. Premier François Legault has repeatedly insisted Quebec would look to safeguard local jobs without investing additional sums in the partnership known as Airbus Canada LP. Quebec owns a stake in the venture after Legault's predecessor, Philippe Couillard, invested US$1 billion in 2016 to prop up the jet program that was then known as the Bombardier C Series.

Bombardier handed the reins to Airbus in July 2018, free of charge. "I think there will be good news" on the jobs front coming out of the Bombardier results Thursday, Fitzgibbon told reporters in Quebec City Wednesday morning. "I think it will be positive." Related Fitzgibbon declined to provide specifics, saying it will be up to the Montreal-based company to make announcements first. "I have all the information. I'm not comfortable talking about it," the minister said.

"Mr. Legault was very clear about not putting in additional money in the A220, about protecting the jobs, and I want to protect the $1 billion that was invested." More than 2,500 people work on the A220 program in Mirabel, with hundreds more employed by various suppliers — such as Stelia Aerospace and Bombardier itself — in the province. All told, Quebec's aerospace industry employs about 42,000. Bombardier said Jan. 16 it was "reassessing" its ongoing involvement in the A220 partnership. It also said that it would disclose the amount of any write-down connected with the venture when it reports financial results. Airbus Canada's most recent financial plan "calls for additional cash investments to support production ramp-up, pushes out the break-even timeline, and generates a lower return over the life of the program," Bombardier said Jan. 16.

"This may significantly impact the joint venture value." Bombardier is in advanced talks with the European planemaker to sell its remaining stake in Airbus Canada, the Wall Street Journal reported last week. Such a deal — which would mark Bombardier's exit from the commercial aviation industry — would leave Airbus to handle any additional investments on its own. Airbus "did not particularly want to do this at this time, but is presented with little choice if Bombardier is pulling back," Reuters said, citing an unidentified source familiar with the matter. Separately, French train maker Alstom SA is set to hold a board meeting Wednesday evening to decide on a possible bid for Bombardier Transportation, Reuters reported. An offer would value Bombardier's majority stake in the rail business at around $7 billion, according to the French television station BFM TV. Alstom would also look to buy out the Caisse de dépôt et placement du Québec's minority stake in Bombardier Transportation by offering shares, according to BFM TV. [email protected] Quebec Economy Minister Pierre Fitzgibbon says "positive" news for the province will likely be announced Thursday by Bombardier when the aircraft and train manufacturer releases its financial results. The minister says he has read "all the information" but that he is "not comfortable talking about it yet," opting to leave the announcement to the company. Fitzgibbon, asked Wednesday if jobs would be maintained in Quebec, replied that he believed "there will be good news," without stating whether the province would again provide financial support to the multinational company. READ MORE: Quebec premier watching Bombardier's financial situation 'very closely' The provincial government has already signalled that it has no plans to inject more money into the A220 program — formerly Bombardier's C Series — which is now controlled by Airbus. Instead, Premier François Legault says the goal is to protect the government's US$1-billion investment in the A220 in 2016. Story continues below advertisement Bombardier, which is the subject of several rumours about its future, will detail its performance in the fourth quarter and for the year 2019 on Wednesday after warning last month that is was considering alternatives to reduce debt. READ MORE: Bombardier's shares plunge after it slashes earnings forecast for 2019 The Montreal-based company is said to be negotiating with Airbus to sell its share in the Airbus Canada Limited Partnership. There have also reportedly been talks with the Rhode Island-based Textron regarding the sale of its business jet division, which is very active in Quebec. On Wednesday, the French news outlet BFM also reported that Alstom was preparing to finalize an offer to acquire Bombardier Transportation, a division that the Caisse de depot et placement retains a 30 per cent stake in. PARIS — French train maker Alstom's board will meet on Wednesday evening to decide on a possible offer for the rail business of Canada's Bombardier, a source familiar with the situation told Reuters. French TV station BFM reported earlier on its website that Alstom is set to make a firm offer for the Bombardier division, valuing it at just under US$7 billion. Alstom and Bombardier declined to comment. Quoting several sources close to the company, BFM said the two firms had been discussing a deal for months and that Alstom had recently made a non-binding offer valuing the business at US$7 billion. The new offer would be binding and would be worth less than the first one, BFM said. BFM reported that Alstom would finalize its offer after Bombardier releases earnings on Thursday. It said that following Alstom's first offer, considered attractive by Bombardier, the firm had opened its books to Alstom for due diligence. BFM quotes sources as saying that while the firm has a US$35 billion order book, many of its contracts are not very profitable. BFM wrote that Alstom would offer cash for Bombardier's 70 per cent stake of its railway business and Alstom shares for the 30 per cent held by Canada's Caisse de dépôt et placement du Québec. It also said that Alstom was the only bidder for the railway business, after Siemens and Hitachi withdrew. Reuters reported late last month that Bombardier had approached Alstom and Japan's Hitachi to find a merger partner for its rail business as it struggles to contain costs. © Thomson Reuters 2020