Circling the drain

The Government of Canada has been throwing money in all directions since the COVID-driven economic lockdowns began. Much of the spending has been essential to prevent a complete collapse in demand -- the CEWS and CERB benefits for individual workers, for example, although there is mounting evidence of a significant number of fraudulent claims. Bailout funds directed to businesses present more of a mixed picture, especially in cases where a company has taken all the money on offer and still resorted to mass layoffs, Air Canada being a prominent example.

It's no surprise to find that one company with both hands out is Bombardier, which has been effectively a ward of the Federal and Provincial governments for many years.  The company has been selling itself off piecemeal, with the rail, commercial jet and regional jet divisions disposed of, to Alstom,  Airbus and Mitsubishi respectively. Through good luck or good judgment, the company has actually done very well here: none of those assets would be easy to sell in today's market, and all would be bleeding the company of cash it simply doesn't have. 

By selling these substantial divisions, however, Bombardier has in effect bet its future on its business jet operation.  You can make a case that companies will want more of these for their top brass in a post-COVID world, given the shrinkage of commercial airlines. (The opposite argument can also be made, given the ease with which many companies have taken to work-from-home in recent months). For the moment, however, demand for these jets has dried up, and the company recently announced it would be laying off 2500 workers, about one-quarter of its much-reduced labour force.

Even in its shrunken state, Bombardier retains direct access to the spigot for public funds.  Quebec Finance Minister Eric Girard has offered to help the company through "this difficult period", citing the unfortunate precedent of a bailout loan recently offered to, of all things, Cirque du Soleil. And that's not all -- the Federal government has announced a deal, without going to tender, to buy two Challenger jets for early delivery, paying what looks like full list price and more for the privilege. There's not much of Bombardier left to save, but I suppose in current circumstances you can't really blame the owners for asking, or the governments for ponying up yet again.