Flight into danger

It's been more than a year since Bombardier held out the begging bowl for handouts from the Federal and Quebec governments.  Quebec (and its pension fund) ponied up quickly, putting a total of C$ 2.5 billion into the company's aerospace and rail divisions, in return for a substantial ownership stake.  While bragging about its business turnaround and its strong cash position, the company continued to seek a further billion dollars from the Federal government.

A deal was finally announced on Tuesday, with the Feds providing $373 million in interest-free loans, to be repaid as Bombardier sells its passenger and executive jets.  The fact that the amount is so much smaller than the company first requested suggests that the Federal government tried to drive a hard bargain in order to protect the interests of taxpayers; the fact that the deal was announced late in the business day suggests it may not have been too proud about making any deal at all, and was hoping to minimize media coverage.

If that's the case, the plan was largely successful.  Coverage so far has been limited and largely non-judgmental -- this story from the CBC website is fairly typical.  However, as the headline notes, Brazil has been quick to complain to the WTO about the deal, fearing the impact on its own  aircraft manufacturer, Embraer, which competes directly with Bomber in the small passenger jet market.

A challenge from Brazil is one thing, but one wonders how carefully the folks in Ottawa have considered the possibility that the US will also take umbrage.  It's a well-established fact that every country finds ways to subsidize its airline industry, but at least the US is a little bit subtle about it, favouring Boeing through wildly biased procurement policies, primarily for the military.  A direct loan such as that to Bombardier is pretty blatant, and seems certain to raise hackles with the protectionists surrounding Donald Trump, whom Prime |Minister Trudeau is to meet next week in Washington..

An opinion poll in the Toronto Globe and Mail says that Canadians want Trudeau to stand up to Trump, even if that leads to a trade war.  Injecting free money into Bombardier is one way of ensuring that that's exactly what we get.