Canada Gov't, Bombardier Still Far Apart In Aid Talks

The Canadian government and Bombardier are still not close to reaching a deal on aid for the struggling manufacturer, making an agreement before its annual meeting this month unlikely.

Bombardier wants Ottawa to invest $1 billion in its CSeries aircraft, which is years behind schedule, billions of dollars over budget and has won relatively few orders compared to its rivals.

A person with knowledge of the talks said one sticking point is that Ottawa wants Bombardier to commit to performance guarantees, and even suggested the government could walk away from aid talks.

"We want to help, but it's got to make sense," said the person, who asked to remain anonymous because of the sensitivity of the matter.

Bombardier and Ottawa are at odds over the level of the Canadian government's involvement in the day-to-day running of the company, a second person familiar with the talks said.

Government proposals for operational oversight in return for funding represent "a level of micro-management that is beyond what any normal investor or board member would expect," the person added.

Speaking to reporters in Toronto, Innovation Minister Navdeep Bains said the government is having "constructive" discussions with the company.

He spoke after Bloomberg, citing unnamed sources, earlier reported that Bombardier rejected an initial investment proposal from Ottawa.

A third person familiar with the talks said it was incorrect to say that Bombardier had rejected the counter-offer, since the two sides were still involved in "complex and multi-dimensional" negotiations.

A Bombardier spokeswoman declined to comment. Bombardier holds its annual meeting on April 29.

Bombardier struck a $1 billion deal with the province of Quebec last October to support the CSeries and is seeking a similar sum from Ottawa, but federal officials have said they do not want to imitate the structure of that deal, which some felt did not impose enough conditions on the company.

Ottawa is more interested in an agreement like the one Quebec's public pension fund manager struck last November when it agreed to buy a 30 percent stake in Bombardier's rail business, the officials said.

That deal imposed benchmarks on Bombardier and also laid out what returns the Caisse de depot et placement du Quebec can get for its money.

Quebec, however, wants the federal deal to be comparable to its own to avoid looking like it had negotiated the weaker of the two agreements with Bombardier, said a person familiar with the matter.

Legislators in the ruling Liberal Party are also concerned about possible job losses at the company.

Bombardier shares hit a six-month high on Friday following reports it was poised to secure the largest order so far for the CSeries from US carrier Delta Air Lines. The order is expected to be for 75 CSeries jets with options for 50 more. Industry sources said Delta's board was due to vote on the proposal later this month.

The US airline is also likely to order 30 A321s from Airbus, a source close to the negotiations said.