Quebec Poised to Bail Out Bombardier?

Airbus has bowed out of a deal to buy a stake in CSeries
Airbus has bowed out of a deal to buy a stake in CSeries

Bombardier’s withering financial problems are leading to speculation that the family control over the company is about to come to an end.

Various financial publications are predicting Bombardier will be bailed out of its cash crisis by the Quebec government in the form of even more investment by the Quebec Pension Plan.

Bombardier is down to about $3 billion in cash reserves, thanks to a variety of factors, although the CSeries development program always seems to get singled out for most of the blame.

Regardless of where the money is going, the cash reserves only represent about a year’s worth of liquidity for Bombardier, which burned through $1.6 billion in the last six months.

However, the last thing Bombardier needs is more debt so any help from the pension fund will likely be in the form of equity and the number will almost certainly be big enough to wrest majority control from Bombardier family shareholders and their cronies.

The speculation came after Airbus confirmed that Bombardier had asked it to take over a majority stake in the CSeries program and that it had rejected the plan. Bombardier also confirmed the report and said it would continue to look for buyers for CSeries. Bombardier shares dropped on news of the failed talks.