Updated: "Foreign Entity" Investing with Ottawa And Quebec in the CSeries and Bombardier? USA, Europe, or China?
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11:45 - Quebec, Canada - March, 18 2016
Updated 13:00 - Quebec, Canada - March, 29 2016
Will Justin Trudeau invest in Bombardier CSeries Alone?
As we know, also present during the dinner in *Washington were the chief executives of Boeing and Lockheed Martin, both fighting to get the Canadian CF-18 military replacement contract. Lockheed's troubled F-35 stealth fighters and Boeing's F-18 Superhornet (the newer version of the Canada current CF-18) are both competing in this race.
What does it take to win the CF-18 replacement contract in Canada?
On the other hand, we have Quebec Minister Jacques Daoust mentioning (by mistake) few days ago that Bombardier has other offers and he needs the Ottawa investment not to lose control to a, what he called, "foreign entity".
Do I see the light in this rather long Ottawa negotiation process? Remember Justin Trudeau said that he wants to make sure the CSeries will be set for GOOD and for a LONG TERM SUCCESS.
Now we just learned that Morgan Stanley is involved… Something big I would say, since due diligence is necessary said the Federal government. Why so when Bombardier and the CSeries is so well known by the government, they have their HQ in Canada, do so many filings with the government because of prior loans and grants… Why a "due diligence" and so much time to come up with a deal?
My experience would say something bigger than just the Federal investing in Bombardier CSeries is being done here… But What?
Looking at all this, I would not be surprised to see a deal with Ottawa, and Quebec, and Bombardier involving a minimum of one more "foreign entity", like Quebec Minister said, but who?
We know that Boeing newer MAX aircrafts are not selling greatly compared with the newer Airbus NEO. As you know those recent 737 sales, United for example, Boeing was not able to sell its newer MAX model but the older one instead… Not "new enough"?
Ottawa keeps saying they were asked for US$1B from Bombardier. If a third party (forth in this case) is involved, I could see an additional US$3B added to the existing Quebec investment coming in the new CSeries Holding Company. How? A partnership of 1/3 Bombardier, 1/3 Quebec+Ottawa (US$1B each), 1/3 "Foreign Entity" for US$2B, giving a total value of $6B for CSeries, which is the amount invested by Bombardier for the CSeries, would it make perfect sense!?!
Having such additional partner would provide a drastic increase in the sales and commercial success of both the CS100 and CS300 CSeries. The robust cash full CSeries Holding Company will have the funding for the upcoming CS500 & CS700, quite inexpensive to develop now that the base CSeries is certified.
For such an investor, Canada is a good place to be, low wages, plenty of aerospace qualified people, plenty of space for growth. Montreal Mirabel YMX/CYMX airport dual 12000' runways, all the land available there for factories & office expansions and access to all the great new technologies that CSeries has, it works, it is certified! This is "time to market" huge savings!
For Ottawa and Quebec governments, it would make the CSeries Holding Company an entity with a minority government ownership, making it a "none government controlled" company.
If not Boeing, who else? I'll be very happy that Canada replaces the current old CF-18 Hornet with the brand new beef up Boeing F/A-18E Super Hornet** "IF" Boeing do agree to become an important partner with Canada in its aerospace industry. I don't know why, but I think the SuperHornet is just great! You? Airbus from europe? I love the Rafale as well! Dassault offered Ottawa to have it assembled in Canada if they were the one selected! It's a start in the negotiation process, don't you think? But I think of another party that could be very interested by Canada and Bombardier...
But, the third party could be China! Remember Bombardier has strong ties with China for many years as the Desmarais as well: Those deals with another country do require Ottawa's permission... Is it why Bellemare wanted Ottawa to be involved? Why it is taking so long?
As for Bombardier Transport, the other 50% of Bombardier Inc., other projects are in development in Europe http://www.fliegerfaust.com/news-from-france-emman...
Note: What can Trudeau do to add 70 CSeries firm orders quickly? Accept the Toronto Island airport expansion as planned and allowing up to 49% of foreign ownership in Canadian transport companies. This would confirm 30 CSeries for Porter (as planned) and 40 CSeries for JetLines*** ]
Looking forward to know what "the real deal" is all about from Ottawa with Bombardier...
**Justin Trudeau vows to scrap F-35 fighter jet program: http://www.cbc.ca/news/politics/canada-election-20...