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 The federal government is under enormous pressure from the province
of Quebec, which last year invested $1 billion in the firm's CSeries
passenger jet for a nearly 50 percent stake in the project.
Bombardier acts as the center of the aerospace industry in Quebec.
Although the CSeries is billions of dollars over budget and years
late, not helping the firm would cost the Liberals support there.
"It is very, very likely the government will step in but the details
still need to worked out," said one person with knowledge of the
file.
Bombardier wants the federal government to follow the example of
Quebec and take a stake in the CSeries, though it is not clear how
big.
In public, federal cabinet ministers have stressed the importance of
the aerospace sector, with Treasury Board Minister Scott Brison
saying on Friday the Liberals would continue to invest in the
industry.
But sources say Ottawa is concerned about Bombardiers's dual class
share structure, which gives the Bombardier-Beaudoin family a
roughly 54 percent voting stake.
Amid vocal criticism of Bombardier's management some Liberals have
suggested the company could dilute or even scrap the dual class
structure, thereby making it more accountable to investors.
Bombardier has hitherto rejected this idea and there is no guarantee
the firm would change its mind under pressure from Ottawa, setting
up a potential standoff.
"The Quebec government got a bad deal with its investment in the
CSeries," said one senior Liberal, citing the lack of concessions it
obtained.
Quebec's 40-strong Liberal caucus has privately told the office of
Prime Minister Justin Trudeau that it is vitally important the
aerospace sector be protected, according to two party sources, one
of which said he knew the government would back Bombardier.
But Liberals are also cautious about a backlash elsewhere.
The right-leaning Canadian Taxpayers Federation says Bombardier and
De Havilland - which Bombardier bought in 1992 - have already
received more than C$2.2 billion ($1.60 billion) in government loans
and contributions since 1966, adjusted for inflation.
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Another potential challenge is the energy-producing western province
of Saskatchewan, hard hit by slumping crude prices, and already
unhappy with Quebec over its resistance to a pipeline that would
take oil from the west to the Atlantic.
Bombardier on Wednesday announced it would cut its workforce by
7,000, including 2,830 positions in Canada.
"If the federal government is considering a $1 billion bailout to
address 2,830 Canadian job losses at Bombardier, what about the tens
of thousands of job losses in Canada's energy sector?" Saskatchewan
Premier Brad Wall said in a Facebook post.
The risk of exacerbating long-standing tensions between the West and
Quebec means Ottawa needs to show it wrung concessions from
Bombardier, said a Liberal legislator from outside Quebec.
"In negotiations like these both sides make compromises, they offer
something up. What is Brad Wall going to say if he sees we handed
over the money and didn't get very much in return?" said the
legislator.
Whether or not to aid Bombardier is formally a decision for
Innovation Minister Navdeep Bains. Bains and other ministers hailed
Air Canada's announcement this week that it is looking at buying up
to 75 CSeries jets.
Despite the breakthrough, orders for the CSeries trail far behind
those for similar-sized airliners produced by Boeing Co <BA.N> and
Airbus Group SE <AIR.PA>.
($1 = 1.3767 Canadian dollars)
(Editing by Jeffrey Hodgson and Tom Brown)
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