Ottawa loans $173M to SAS to help complete order
Ottawa loans $ 173M to SAS to help complete order
Ottawa is lending Scandinavian Airlines SAS up to $ 173 million to help it purchase eight aircraft ordered last year from Bombardier.
August 5, 2009 By Ross Marowits | The Canadian Press
Aug. 5, 2009, Montreal, Que. – Ottawa is lending Scandinavian Airlines SAS up to $173 million to help it purchase eight aircraft ordered last year from Bombardier.
International Trade Minister Stockwell Day announced the loan Wednesday.
The loan will be administered by Export Development Canada, but the government assumes the risk should the loan not be repaid.
Day suggested the loan would help to support the aerospace industry, which employs tens of thousands of Canadians, especially in Quebec.
"EDC is providing repayable loans to ensure the aircraft production sector remains strong during this economic downturn," he said in a news release.
The loan will support the sale of eight Q400 and CRJ900 aircraft, whose total list price ranges between US$232 million and US$320 million.
SAS and three affiliates ordered 27 aircraft in March 2008, with options for two dozen more aircraft, as part of a compensation agreement after landing gear problems left some of the airline's planes grounded in 2007.
Under the deal, which also involved landing gear manufacturer Goodrich Corp., the airline received more than US$164 million in compensation in cash and credits for future aircraft orders.
The government used the Canada Account to provide billions of dollars in financial aid to General Motors and Chrysler as they restructured under bankruptcy protection from creditors.
Since 2001, the government has helped finance five Bombardier Aerospace orders, including two to Delta Airlines subsidiary Comair, one to Air Wisconsin and one to Northwest Airlines. All of the loans exceeded $100 million.
Export Development's corporate account has also been used to support seven Bombardier Aerospace transactions this year and 11 last year. Most were for orders from foreign carriers. But Canada's Porter Airlines, which operates Q400 service from its base on Toronto Island Airport, received funds on three occasions.
Bombardier shares rose nearly five per cent, gained 19 cents at $4.09 in morning trading on the Toronto Stock Exchange.