C100 At Paris Airshow

[boestar]

if you really think that the runway extension costs will not fall back on the taxpayer then you really have not been paying attention to the way our government works.  It will most definitely fall on the taxpayer unless Porter foots the entire bill which I am sure it will not.

 

[rudder]

What can you expect from this government as it directly pertains to Porter?

- US customs pre-clearance at CYTZ as will be announced today

- financial aid for BBD in exchange for equity, control, or covenants 

What you will not see under this majority government?

- changes to the terms of the tripartite agreement

- runway extensions at CYTZ for the express purpose of accommodating jets

- support for the Porter C-series LOI in the form of approval for jets at CYTZ

 

When is the next federal election? 2019? Maxime Bernier the new Porter advocate in YOW? My how times have changed. It is tough being on the outside looking in.

[inchman]

It would be interesting to determine how many actual dollars in Canada the 40 Porter orders are worth. I would suggest that, due to the manufacturing processes involved, most of the parts would be made in other countries with final assembly and whatever profit is generated occurring in Canada. Of course, at least some of BBD is held out of the country, so that money is exported as well.

So, the question is, is there enough dollars generated by the Porter order to justify the cost of expansion of the runway and loss of value of local real estate (whether the noise issue ... in terms of volume or additional operations... is valid or only perceived)? Much of the real estate in the noise envelope of YTZ is investment rather than primary residence and, as such, is subject to capital gains and taxable. For the government to spend millions to expand the airport causing them to lose millions in capital gains tax for a minimal increase in profit and jobs for BBD would have to be weighed as part of the calculation.

[rudder]

21 minutes ago, inchman said:

It would be interesting to determine how many actual dollars in Canada the 40 Porter orders are worth. 

Porter has no orders. Just a conditional Letter of Intent. No deposit and no revenue guarantee to BBD.

[blues deville]

Wouldn't be the first time the Feds have spent lots of money to create some jobs in various regions of Canada. A once crown corp version of Air Canada and a more recent VIA Rail ($475M in November 2001.....it was a Friday) "funding" from a Liberal government have benefited from the Canadian tax payers. YTZ was built by the city of Toronto in pre-federal tax times so a relatively minor extension ( breakwater, landfill, runway ) wouldn't break the tax payers bank. 

I have yet to see or hear the CSeries in person but I doubt it's noise footprint will be greater than the current Q400s. 

[MD2]

It is very simple. Bombardier is in serious financial crisis and has reached out to both Quebec and federal governments to invest in the C series aircraft. The Quebec government has responded positively and also said that it is willing to help even more to keep Bombardier, its well-paying jobs and its position in global aviation industry going. It has also said that the partnership was always meant to be among three parties, hinting at the federal government and both Bombardier and Quebec have called on the federal government for partnership.

The federal government has said that it will look at Bombardier's proposal "on a business case". A decision to unilaterally cause cancellation of Porter's order worth over 2 billion dollars and more at a time of "serious financial crisis" at Bombardier (a firm partner of Quebec, and potential partner of the federal government) does not make much business sense. Unless of course the federal government is not interested in responding positively to Bombardier and Quebec which also helps Canadian economy.

[Guest]

57 minutes ago, MD2 said:

It is very simple. Bombardier is in serious financial crisis and has reached out to both Quebec and federal governments to invest in the C series aircraft. The Quebec government has responded positively and also said that it is willing to help even more to keep Bombardier, its well-paying jobs and its position in global aviation industry going. It has also said that the partnership was always meant to be among three parties, hinting at the federal government and both Bombardier and Quebec have called on the federal government for partnership.

The federal government has said that it will look at Bombardier's proposal "on a business case". A decision to unilaterally cause cancellation of Porter's order worth over 2 billion dollars and more at a time of "serious financial crisis" at Bombardier (a firm partner of Quebec, and potential partner of the federal government) does not make much business sense. Unless of course the federal government is not interested in responding positively to Bombardier and Quebec which also helps Canadian economy.

Is Porter's order, a real order with money down or just a request to be positioned for possible future deliveries?

[blues deville]

Quite real I think. A substantial deposit in 2013.

https://www.wingsmagazine.com/news/porter-plots-the-future-13285

[Guest]

9 minutes ago, blues deville said:

Quite real I think. A substantial deposit in 2013.

https://www.wingsmagazine.com/news/porter-plots-the-future-13285

The reason I asked is that the only press release in 2013 from Porter said

Quote

TORONTO, April 10, 2013 – Porter Airlines has signed a conditional purchase order for 12 Bombardier CS100 aircraft, with options for an additional 18 CS100 aircraft. The agreement also includes purchase rights for six Q400 NextGen aircraft. Delivery of Porter’s first CS100 aircraft would be in 2016.

No mention of any deposit.  I couldn't get the wings article to display.

[blues deville]

9 minutes ago, Malcolm said:

The reason I asked is that the only press release in 2013 from Porter said

No mention of any deposit.  I couldn't get the wings article to display.

7 or 8th paragraph...

Interestingly, Porter’s order for 12 CS100’s – with options for a further 18 of the jets – remains on the books, but Deluce cautions against reading too much into that. “Just the opposite,” he warns. “We have had the deposit since April 2013, and there is really no good reason to remove it. It is a matter of us keeping our options open rather than being pointed in one direction. There is no reason to close that avenue off while we are contemplating our next move. - See more at: https://www.wingsmagazine.com/news/porter-plots-the-future-13285#sthash.O6nbEcOp.dpuf

 

[Airband]

Those experiencing time-outs/slow loads with Blue's link could try their luck with PDF appended below

Porter_Plots_The_Future_moving_forward_without_jet.pdf

[MD2]

4 hours ago, Malcolm said:

Is Porter's order, a real order with money down or just a request to be positioned for possible future deliveries?

Porter has made a deposit and seems it could do more under the right conditions.

[Guest]

53 minutes ago, MD2 said:

Porter has made a deposit and seems it could do more under the right conditions.

Any idea how much?  Normally it would be something to boast about in a press release.

[rudder]

16 hours ago, MD2 said:

It is very simple. Bombardier is in serious financial crisis........

Most companies that are in 'serious financial crisis' embark on a voluntary restructuring, or if need be, enter in to a court supervised involuntary restructuring. In both cases, it typically does not bode well for the incumbent owners.

Why should BBD be treated any differently? And why should the shareholders be shielded, or perhaps, even benefit from the realities of poor business decisions made by senior management or the BOD?

This is not nearly as simple as you would like to portray it. And the Feds are right to take a sober look at what BBD is asking for with a view to realistic and reasonable terms if taxpayer dollars are involved.

[Guest]

Guess they just don't want us to know how much of our money they are getting or have gotten.

Quote

 

How Bombardier Inc suppresses information about how much government funding it receives

 

‎Yesterday, ‎March ‎11, ‎2016, ‏‎3:12:39 PM | Kristine Owram

Bombardier Inc. has gone to great lengths to suppress the release of information about the government funding it receives, heading to court 10 times in nine years, often citing competitive concerns.

Court records and access-to-information documents obtained by the Financial Post show how difficult it is to glean the outcome of previous government support for the Montreal-based aerospace giant, even as Ottawa considers its request for another US$1 billion (about $1.3 billion) in aid.

These records are often redacted at Bombardier’s request, or appear incomplete, even in cases where the company’s industry peers allowed the same information to be released.

Last October, Quebec agreed to invest US$1 billion in Bombardier’s CSeries commercial jet program, which has been struggling to generate sales amid delays and cost overruns. The company now says it needs additional federal funding to help carry it through until the CSeries starts generating positive cash flow in 2020. That funding could be included in the Liberal government’s budget, set to be delivered on March 22.

If you’re going to get the money, surely the price of admission is that you have to be transparent about how and when you’re paying it back.

A contribution of $1.3 billion would equal all the repayable funding Bombardier has received over the past 50 years, according to Industry Canada’s calculations.

But how that money was spent, and how or even if it was paid back is difficult to discern from the documents released. While Bombardier says the information must be withheld for competitive reasons, the company has made this argument far more frequently than its industry peers. With the government considering a historically large investment in the company, some are arguing that transparency should be a condition of any new cash injection.

“If you’re going to get the money, surely the price of admission is that you have to be transparent about how and when you’re paying it back,” said Aaron Wudrick, federal director of the Canadian Taxpayers Foundation.

The aerospace sector is no stranger to government largesse. Starting with the Defence Industry Productivity Program in 1959, Ottawa has frequently doled out grants and loans meant to support Canada’s aerospace champions, most of which are based in Quebec.

Handout/ BombardierLast October, Quebec agreed to invest US$1 billion in Bombardier’s CSeries commercial jet program, which has been struggling to generate sales amid delays and cost overruns.

In a June 2014 analysis by the free-market-oriented Fraser Institute, a list of the top 10 recipients of financial assistance from Industry Canada includes eight companies that generate at least a portion of their revenue from aerospace. (The list doesn’t include the 2009 bailout of General Motors Canada and Chrysler Canada, which was done through the Department of Finance.)

Pratt & Whitney Canada Corp. is first on the list with $3.3 billion in inflation-adjusted contributions between 1961 and 2013. Bombardier received $1.15 billion and De Havilland Inc., which was acquired by Bombardier in 1992, is third with $1.09 billion.

Industry Canada provides slightly different numbers, saying Bombardier has received $1.3 billion in repayable contributions since 1966, of which it has repaid $584.6 million to date.

Most of this taxpayer funding is in the form of repayable or conditionally repayable loans, which are triggered when, for example, the recipient’s gross revenues are higher than a base amount laid out in the contract.

However, because of Bombardier’s efforts to block the release of information, it’s virtually impossible to determine whether the individual contributions — and repayment of those contributions — met the objectives and forecasts of the government. It’s also very difficult to discover whether government contributions have created the jobs that were promised when the funding was announced.

Bombardier is by no means the only aerospace company that seeks to restrict disclosure of its repayments to government, but it does appear to be the most aggressive. It has gone to court 10 times to block the release of information, while Pratt & Whitney Canada has gone to court twice.

The company said it is simply protecting its legal right to withhold information on competitive grounds.

“Bombardier and Industry Canada are in agreement that information relating to government contributions is proprietary and can validly remain confidential for competitive reasons,” company spokeswoman Isabelle Rondeau said in an email. “Through a legal process, we were able to confirm that we ought to preserve Bombardier’s confidential information.”

THE CANADIAN PRESS/Ryan RemiorzAlain Bellemare, President and Chief Executive Officer, Bombardier Inc. speaks at a news conference in Mirabel, Que., on Friday, Dec. 18, 2015.

The Access to Information Act allows the government to refuse to disclose any record that “could reasonably be expected to prejudice the competitive position of a third party.”

The onus is on the third party to prove that disclosure would hurt its competitiveness. If a dispute over the release of information makes it as far as the Federal Court, the company is asked to justify why disclosure would put it at risk.

“The courts have been quite good about insisting that a certain evidentiary threshold be met to justify the withholding of the information,” said Teresa Scassa, who holds the Canada Research Chair in Information Law at the University of Ottawa.

Bombardier and Industry Canada are in agreement that information relating to government contributions is proprietary.

However, she pointed to one case where Bombardier argued that “the extreme competitive nature” of the aerospace industry meant that it shouldn’t have to disclose information — a justification that could arguably be used in any request for company data.

“I think that could become a justification for pretty broad withholding of information,” Scassa said.

Bombardier’s legal strategy appears to be working, as it has successfully challenged several requests for information in the courts.

The result of these challenges means we get a fragmented picture of government support, particularly when it comes to the repayment of loans.

Here are just a few examples:

• In response to a request for all Industry Canada contributions of $5 million or more since April 1996, the released documents include a list of dozens of recipients ranging from Research In Motion Ltd. (now BlackBerry Ltd.) to Toyota Canada, but not a single mention of Bombardier.

THE CANADIAN PRESS/Paul Chiasson A Bombardier plant in Montreal.

However, other documents show the company received at least five contributions ranging from $35 million to $190 million between 1996 and 2009, plus another $350 million through a special program set up to support development of the CSeries.

In releasing the data, Industry Canada said two applications had been filed with the Federal Court to block some information from being released, but didn’t say which company had filed them.

Court records indicate that Bombardier filed two access-to-information-related applications to the Federal Court in the summer of 2014. Those cases are ongoing.

• Bombardier also successfully challenged a 2010 request for all conditionally repayable government contributions it had received since 1982. After reaching an out-of-court settlement with the information commissioner, Bombardier agreed to release some information on how much assistance it had received, but continued to withhold repayment details. (The request also included four other companies, all of which disclosed their repayment information.)

By the time that information was released in June 2014, the numbers were four years out of date.

• It’s not just Bombardier asking to suppress information, of course. A request for information on jobs created or maintained through Industry Canada contributions since 1982 was almost entirely redacted even though the government will often make claims about jobs when it announces funding.

For example, a 1996 press release announcing an $87-million contribution for Bombardier’s regional jet claimed the project “has the potential to maintain and create 1,000 high-quality, long-term jobs.” It is not possible to verify this through the information released.

The lack of disclosure appears to be getting worse. A 2002 request for repayment data on all contributions made under the Technology Partnerships Canada program was disclosed in full. But an identical request made in 2011 saw approximately three-quarters of the repayment information withheld.

 

This may have something to do with the overlapping interests of Bombardier and the government, said Ken Rubin, an Ottawa-based investigative researcher who’s considered one of Canada’s foremost access-to-information activists.

Often, disputes over access to information are settled out of court through an agreement between the company in question and the government, which can create a potential conflict of interest.

“Therein lies the real problem, because particularly in cases like Bombardier and its relationship with the government … the government is party to the efforts to block information about Bombardier,” said Rubin.

“It certainly has never been in the Government of Canada’s interests to release such information.”

Scassa, the information law expert, said openness remains “a very challenging issue” despite oversight from both the Information Commissioner and the courts.

“I do think that is a genuine transparency challenge, that the government may be just as happy not releasing that information as the company is,” he said.

Related

• Quebec proposes curbing Bombardier control of new jet program as it courts federal aid: sources
• A bailout won’t fix Bombardier’s biggest problems: family control and dual-class shares
• Quebec, Ontario premiers team up to push Ottawa to help fund Bombardier Inc

Industry Canada (since rebranded Innovation, Science and Economic Development Canada under the Liberals) said it releases all information that isn’t subject to exemptions under the Access to Information Act.

“Depending on the terms of each contribution program, repayment information, particularly when it concerns a specific recipient and/or project, cannot be provided publicly when the information may be commercially sensitive, could result in financial loss or gain to a third party, or could prejudice the competitive position of a third party,” department spokesman Hans Parmar said in an email.

“In determining what can be released under the ATI legislation, ISED considers the type of program and, depending on the type of information being requested, consults with third parties who may or may not agree to the release of their repayment information.”

In 2009, Industry Canada began releasing twice-yearly repayment status reports for the Technology Partnerships Canada (TPC) funding program, which ran from 1996 to 2006, and its successor, the Strategic Aerospace and Defence Initiative (SADI).

According to the most recent updates, released Nov. 1, 2015,  TPC has disbursed $3.16 billion to date and collected $1.13 billion in repayments. SADI has disbursed $935 million and collected $35 million in repayments.

Handout/BombardierBombardier's legal strategy appears to be working, as it has successfully challenged several requests for information in the courts.

However, these reports are incomplete. The SADI report said $935 million has been disbursed, but if you add up the net expenditures listed for individual companies (there are none listed for Bombardier), it only comes to $696 million. According to the fine print, “Amounts are not provided until completion of the (project’s) R&D phase to protect commercial confidentiality.”

This may explain why there are no Bombardier contributions listed — the CSeries technically hasn’t finished its R&D phase.

Another hole in the government’s disclosures is how actual repayments stack up against estimates. The TPC report said repayments are “in line with forecasts” and the SADI report says they’re “on track,” but those forecasts aren’t released. A recent access-to-information request for repayment forecasts withheld all estimates beyond the 2016-17 fiscal year.

It also appears that the government tends to dramatically overestimate repayments, according to a 2005 report on the value of TPC that was prepared for Industry Canada by consultants Hickling Arthurs Low. The report found that current repayment estimates for the TPC program were 45-per-cent lower than they were at the time the contracts were signed — a difference of nearly $2 billion.

Part of the problem is that the (Access to Information) Act allows them to get away with too much.

The lack of transparency around previous government contributions to the aerospace industry in general, and Bombardier in particular, should concern taxpayers and encourage stronger legislation, said Rubin, the access-to-information activist.

“Part of the problem is that the (Access to Information) Act allows them to get away with too much,” he said. “You need much stronger legislation if these terms are going to come about.”

Scassa argues that a balance needs to be struck between the rights of corporations to protect sensitive information and the need for transparency.

“It’s really challenging because in principle you can certainly understand why companies should not be asked to sacrifice their competitiveness in the name of disclosure,” she said.

“Maybe there needs to be some kind of oversight mechanism that can ensure that the public funds are being spent appropriately and that there’s appropriate accountability for them. That might be the solution.”

Illustration by National Post Graphics http://business.financialpost.com/category/news/feed/

kowram@nationalpost.com

twitter.com/KristineOwram

[MD2]

Malcolm, all aviation and aerospace companies receive assistance in some shape or form from their respective governments, this is not new. It would be naïve to think otherwise. And they don't do it out of the goodness of their hearts either. They do it because these companies provide great many jobs and taxes thru their income and their employees'. They also create many secondary jobs and opportunities. Boeing, Airbus, Embraer, all have this... Bombardier is the Canadian version and an icon in global aviation market.

 

Some seem to misunderstand the situation. Bombardier is NOT restructuring, but is seeking partnership for the C series program. The two are quite different. Bombardier sought this partnership elsewhere too including Boeing and Airbus. However, we all know if they get involved what will happen to Bombardier as a company and the jobs it provides in Canada. That is why it is seeking to keep the partnership in Canada and governments are the prime candidates because of the size of the investment and the benefit they will reap in taxes... 

[Fido]

15 minutes ago, MD2 said:

all aviation and aerospace companies receive assistance in some shape or form from their respective governments,

Hardly a reason to throw more money around.

[MD2]

hmmm...you should have read the rest of the post too that investment is not throwing money around, etc....

[Fido]

5 hours ago, MD2 said:

investment is not throwing money around

That is the current Leftie view.

[J.O.]

Yes it's so much worse than the view that put all of our eggs into one oily basket that's now worth about 25 cents on the dollar.

[Fido]

57 minutes ago, J.O. said:

Yes it's so much worse than the view that put all of our eggs into one oily basket that's now worth about 25 cents on the dollar.

All of Canada seemed to enjoy the revenue.

Now what are they going to do to replace that loss.  Tax Windmills more heavily?

[rudder]

23 hours ago, MD2 said:

Some seem to misunderstand the situation. Bombardier is NOT restructuring, but is seeking partnership for the C series program. The two are quite different.

"Bombardier is in serious financial crisis...."

Your words, not mine.

Why don't you leave the spin to BBD. I am certain they can take care of themselves.

[MD2]

Companies in serious financial crisis need not restructure necessarily, they can also get a cash infusion from a new partner to continue operations normally. This is quite common, in both large corporations or small companies, at a time when the product is great but there is financial difficulties due to other factors. This is the situation with Bombardier and its C series.

[rudder]

15 minutes ago, MD2 said:

Companies in serious financial crisis need not restructure necessarily, they can also get a cash infusion from a new partner to continue operations normally. This is quite common, in both large corporations or small companies, at a time when the product is great but there is financial difficulties due to other factors. This is the situation with Bombardier and its C series.

Fine. 10% of BBD in exchange for $1B? And an end to super majority voting rights. Companies "in crisis" do not get to insulate current shareholders from consequence.

Bombardier Aeropspace is just a division of a much larger corporation. Trying to claim one part of the company is "in crisis" but the rest is not is a grossly opportunistic representation of what is going on at BBD.

[MD2]

Presumably these are some of the type of discussions they are having.

Two tier shares Bombardier claims is for keeping jobs in Canada and stopping the break-up and sale in pieces. These are the type of discussions the government has to have and corroborate the information. Perhaps some management oversight or sharing of sort may be entertained.