Canada Lends SAS Money To Buy Bombardier Planes

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The Canadian government has come up with a creative way of ensuring the orders keep flowing into Montreal-based Bombardier. It's helping to finance the purchases for Bombardier's customers. Last week, International Trade Minister Stockwell Day announced the government was writing a check to Scandinavian Airlines SAS for $173 million CAD toward the cost (up to $350 million total) of eight aircraft from Bombardier. If SAS defaults on the loan, Canadian taxpayers will be on the hook. "[Export Development Canada] is providing repayable loans to ensure the aircraft production sector remains strong during this economic downturn," he said in a news release.

The aircraft in question, a mix of Q400 turboprops and CRJ 900 regionals, were part of a deal struck between Bombardier and SAS last year after a series of landing-gear collapses prompted SAS to temporarily ground its fleet of Q400s. Although the gear collapses were determined not to be related to design or manufacturing faults, Bombardier offered SAS $164 million CAD in cash and credits in exchange for an order of a total of 27 aircraft and options for 24 more. Bombardier says the government loan to SAS is a help. "It's the customer's responsibility to finance the aircraft, but it does help Bombardier to deliver the aircraft, that's for sure," spokesman Marc Duchesne said in an interview with the The Canadian Press. Duchesne said the financing deal meets international standards for government assistance to aerospace companies.