TORONTO — The Government of Canada will provide $372.5 million in zero-interest loans to Bombardier over the next four years to support the Global 7000 and CSeries programs, deepening the financial involvement of federal and provincial Canadian government entities with the troubled aircraft manufacturer. According to a report from the Toronto Star, roughly two-thirds of the loans will be earmarked for the troubled Global 7000 business jet while the remaining third will be used to support the CSeries mainline jet.

The “investment” from the Government of Canada follows close to $2.5 billion of economic support from the provincial government of Quebec, which purchased a 49.5% stake in the CSeries for $1 billion last year and bought a 30% stake in Bombardier Transportation for $1.5 billion via the state’s pension fund (thereby alleviating the financial pressure on the parent company to Bombardier Aerospace). The Government of Canada also invested $350 million into the CSeries program back in 2005 via a similar manner as its current investment. The loans, in addition to not carrying any interest, also only are repaid with hypothetical royalties from future CSeries and Global 7000 deliveries.

While the troubles faced by the CSeries are well known at this point, the Global 7000 business jet (and its sister plane the Global 8000) has quietly faced its fair share of developmental challenges. The clean-sheet successor to the successful Global 6000 has seen its entry into service (EIS) delayed by nearly two years from 2016 to late 2018, in part due to a wing redesign in 2015. The delays and broader fiscal challenges at Bombardier also contributed to a nearly $2 billion cost overrun, combining with excess charges of $2.2 billion on the CSeries to place Bombardier in a precarious financial position.

The Global 7000 finally had its first flight on November 4, 2016, and appears to be on track developmentally, but still requires additional investment to get across the finish line. Perhaps the more pressing issue – not addressed by this investment – is that sales for the Global 7000/8000 have been tepid at best. To date, just 63 Global 7000s and 8000s have been ordered with nearly a third of those coming from one customer: Columbus-based fractional ownership operator NetJets. Conversely, the predecessor three variant family consisting of the original Global Express and the Global 5000/600 sold more than 600 copies.

But business jet demand remains weak worldwide in a trend dating back to the late 2000s Global Financial Crisis. The reasons for the slowdown are myriad, including corporate belt-tightening, public relations woes related to economic inequality, air traffic control infrastructure concerns in Asia (particularly China), and macroeconomic challenges in resource-driven economies (which took a bite out of oligarch demand).

Sales have also been slow for the CSeries since it won program-validating purchases from Delta and Air Canada last year, with few customers (large or small) eager to commit to the small mainline jet. The smaller CS100 had a smooth EIS last July with Swiss, as did the CS300 with airBaltic in December, and our understanding is that initial dispatch reliability has been strong. But Bombardier has ways to go before it can turn a profit on each CSeries delivery and the added funds should certainly help with that.

The additional investment by the Government of Canada likely adds fuel to the fire in the war of words at the World Trade Organization (WTO) between Bombardier and its closest rival, Brazil’s Embraer. While Embraer and Bombardier have been sniping at each other through the WTO on-and-off for more than a decade, tensions have heightened in the past year after Embraer launched a press offensive and revitalized case at last year’s Farnborough Airshow.