(Adds comments from airline executive, industry analyst)
By David Ljunggren and Allison Lampert
OTTAWA/MONTREAL Feb 8 The Canadian government
would be open to providing more aid to planemaker Bombardier Inc
if it developed new aircraft and asked for help, a
source familiar with the matter told Reuters on Wednesday.
Ottawa announced C$372.5 million ($282 million) in repayable
loans for two Bombardier jet programs on Tuesday but the funding
fell short of the $1 billion the firm had initially requested in
The source declined to be identified as the discussions were
Brazil, home to rival plane maker Embraer SA, on
Wednesday opened a formal complaint against Canada at the World
Trade Organization over its subsidies for Bombardier.
Canada's Liberal government says Bombardier is a crucial
part of the high-tech sector.
"If they develop a different program, they may well make an
application for funding, and the government would have to look
at that," said the source, who added: "What they'll need in five
years' time, no one knows."
Although some trade lawyers have suggested Brazil's
challenge could deter potential customers, U.S. regional carrier
Mesa Air Group Inc said on Wednesday it would
continue buying Bombardier planes.
"We've been doing business with them for a long time," Chief
Executive Officer Jonathan Ornstein said. "This is not going to
Morningstar analyst Chris Higgins said the C$372.5 million
would not go very far, given that even modest upgrades to
existing planes can cost several hundred million dollars.
"However, this isn't late 2015 when Bombardier needed a
large cash infusion, and the money also comes with very few
strings attached," he wrote in a note to clients.
Bombardier first asked for a $1 billion injection into its
new CSeries jet, prompting Prime Minister Justin Trudeau's team
to demand a better deal.
At one point, government negotiators pressed the firm to
change its dual share-class structure, which gives majority
control to the Bombardier-Beaudoin family. The company dismissed
The source indicated Ottawa would no longer make similar
demands, saying: "It is not the business of the government to
tell companies to change their share structure."
The source said the latest package relied on funds in an
existing aerospace fund rather than requiring the government -
which is racking up large budget deficits - to spend more.
Asked how Ottawa had decided to give precisely C$372.5
million, the source said: "That is what was available in the
program for the next four years. There's no magic to it."
(Reporting by David Ljunggren; Editing by Denny Thomas, Nick
Zieminski and Lisa Shumaker)