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Money Bombardier's A220 sell-off a win-win, CAQ says, but opposition rips deal

08:06  14 february  2020
08:06  14 february  2020 Source:   montrealgazette.com

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Reuters © Reuters Reuters

QUEBEC — The Quebec government described the deal to sell off Bombardier’s A220 stake to Airbus on Thursday as win-win, even if it means Quebec’s surpluses will sink by $600 million in one shot to cover the losses of the province’s initial $1.3 billion investment.

Also watch: Questions surround future of Bombardier (Provided by CBC)

But Economic Development Minister Pierre Fitzgibbon, who stickhandled the deal on behalf of the Coalition Avenir Québec government, said he believes in the long run that Quebec’s investment in the plane, a decision made by the previous Liberal government , will pay off and Quebec will get back every dime it put in. 

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“The agreement negotiated with Airbus, Bombardier and the government is a winner for all the parties,” Fitzgibbon said at a news conference.

Despite the CAQ’s traditional scorn for the Liberal deal, Fitzgibbon stressed the positives noting Quebec’s share in the A220 is going from 16.36 per cent to 25 per cent and the province is not spending a penny more .

Quebec’s aerospace industry is reinforced because the technical expertise has not been siphoned off to Airbus’s European operations and 3,360 local jobs have been solidified, he said.

And, he added, the fact a new clause stipulating Airbus will buy back Quebec’s shares later than originally planned, in 2026, means Quebec has a “better chance of getting its money back,” because Airbus sales will be at their peak by then. 

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“It is not a coincidence,” Fitzgibbon said. “That’s the date we wanted to have. I am confident we will get our money back.”

He said while the Mirabel plant currently is assembling 50 planes a year, that could triple by 2023-2024 as sales increase. 

a man wearing a suit and tie smiling at the camera © Dave Sidaway

He conceded that the Airbus commitment to maintaining jobs are only verbal guarantees, but argued even those written down on paper often don’t amount to anything in the “reality” of business.

But moments later, Premier François Legault struck an entirely different tone, sounding less convinced that the government will get the money back.

After repeating his criticism that he thinks the Liberals made an error in investing only in the C Series (now A220) division instead of the larger Bombardier Inc., Legault said he has his fingers crossed.

“It was a serious mistake,” Legault told reporters arriving for question period. “We could have saved the jobs without taking this risk, which today will cost US$600 million.

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“We will do everything to ensure that this project is a success. We hope, maybe, that we will recoup at least a part of the $600 million by 2026.”

For now, that $600 million, which Fitzgibbon called a contingency fund, has to appear on Quebec’s books, which means Quebec’s surplus for the year — pegged at $1.7 billion in the last financial update — will go down to $1.1 billion.

The final number will be known when Quebec tables its annual budget on March 10.

Legault repeated he thinks it was an error of Bombardier to try and compete in the commercial airline industry against Boeing and Airbus in the first place.

Both he and Fitzgibbon repeated they believe the future for Bombardier rests in the rail transport division, where there are many fewer players to compete with and a growing demand for electric trains.

“The potential of the train business in North America is humongous,” Fitzgibbon said.

The opposition, however, was stinging in its criticism of the way the CAQ handled the situation.

“What we are seeing today is literally the dismantling of Bombardier,” interim Liberal leader Pierre Arcand told reporters.

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He ripped into Legault, saying the man who describes himself as the great deal-maker has failed miserably because the Bombardier train sales he’s promised have not materialized and he has not protected head offices in Quebec.

He repeated, however, that history will show that the Liberal decision to invest in the C Series saved the plane and now that investment will pay off.

“I am far from throwing in the towel on this,” Arcand said.

“Had we not act acted, the C series would never have been certified, would never have flown,” added former Liberal finance minister Carlos Leitão, noting the Quebec’s aeronautic cluster is alive and thriving.

Quebec solidaire finance critic Vincent Marissal added if safeguarding jobs in Quebec was the priority, the government should have got a written guarantee Bombardier would maintain its 10,000 jobs in Quebec.

And he said the deal hammered out this week appears to be the “least bad of all the bad scenarios.”

“It’s not a great day for Quebec,” Marissal told reporters. “There’s nothing to crow about.”

Interim Parti Québécois leader Pascal Bérubé also pleaded for job safeguards, but refused to blame any government for what happened.

“I don’t think the series of governments that intervened on this file are responsible (for how things have turned out),” Bérubé said. “I think it’s the Bombardier administration itself.”

pauthier@postmedia.com

Twitter.com/philipauthier

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