[TORONTO] Canadian plane and train maker Bombardier Inc reported a huge quarterly loss on Thursday tied to impairment charges, and outlined a plan that will see the Québec government invest US$1 billion in its long-delayed CSeries jet program.
The company confirmed a Reuters report Wednesday that it plans to form a joint venture with the government of Québec to complete work on the long-awaited new jet that is due to enter into service next year, but is already billions of dollars over budget.
The Québec government will hold a 49.5 per cent stake in a limited partnership set up to complete the program. "This move will also keep C Series operations here in Québec for at least another 20 years," Québec Minister of Economy Jacques Daoust said in a separate statement.
The company reported a third-quarter loss of US$4.6 billion, or US$2.20 a share. That compared with net income of US$74 million, or 3 cents a share, a year earlier.
The quarterly loss was tied largely to impairment charges on the CSeries and its Learjet 85 program that is being permanently mothballed, as Reuters had earlier reported.
The province said its investment will come from the Economic Development Fund that is managed by Investissement Québec, a financing corporation set up to attract investment to the province.
After investing US$1 billion, Québec will hold a 49.5 per cent stake in the new entity that will own the CSeries. Bombardier will own the other 50.5 per cent stake and will transfer to the new venture 1,700 employees, and assets and intellectual property required to continue to pursue the design, manufacturing, and marketing of the CSeries planes.
The government will receive 200 million stock warrants for its investment. Each warrant will entitle the government to buy a Class B share in Bombardier at an exercise price of C$2.21 (US$1.67) a share within a five-year period.
The cash-strapped company's shares closed at C$1.61 on Wednesday.