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Mon, Dec 08, 2003

Bombardier President and CEO Calls for a Comprehensive Canadian Aerospace Policy

Tellier Calls It Part Of The "New Economy"

Bombardier President and Chief Executive Officer Paul Tellier (right), wants government policy-makers and industry stake holders to develop a comprehensive Canadian aerospace policy.

"If the Canadian aerospace industry is to survive with the reputation of excellence it has gained worldwide with continued benefits to our economy, the Government of Canada and all stake holders will have to join together to establish the basic tenets of a comprehensive aerospace policy," Tellier told the Vancouver Board of Trade.

Tellier said he was encouraged by one of Paul Martin's recent speeches, in which the next Prime Minister focused on the "new economy," including transformative technologies. "There is a need for the industry to make a collective case to be considered a transformative technology and a major component of Canada's industrial, scientific, trade and economic policies," argued Tellier.

Securing aircraft financing is the most immediate challenge facing Canada's aerospace industry, Tellier said.

"The recent downturn in the airline industry has put commercial air carriers in dire financial straits," continued Tellier. "With the continuing weakness in the airline sector, airlines have parked large parts of the fleets of widebody and narrowbody jets. And great numbers of financial institutions have decided to get out of the aircraft financing business altogether, because they have seen so many non-performing loans on their larger aircraft."

"Meanwhile, most of these same airlines have turned to regional aircraft on routes that would not be profitable with larger aircraft. This has created a market anomaly: a product with strong demand with no available financing to support its purchase."

Describing Export Development Canada (EDC) as a bridge between support provided by commercial banks and what exporters need to succeed in international markets, Tellier said "an increased participation of EDC would represent a clear win-win situation for the following reasons:

  • EDC does not subsidize Bombardier nor its customers since it operates like a business, collecting interest on its loans and premiums for its insurance products.
  • EDC's aerospace portfolio has a non-performing rate of 1.6% compared to a non-performing rate of 8.6% for the overall portfolio.
  • EDC can also make money through sharing incremental fees as compensation for increased exposure on certain aircraft financing accounts.
  • Export financing is common to the whole industry including Airbus, Boeing and Embraer.
  • EDC's customer financing ensures the sustainable success of the Canadian aerospace industry."

In the event that Bombardier could not secure financing for its customers, Mr. Tellier said it "would have to cut back production immediately which means significant cuts for the Canadian aerospace industry." He added "a production cut of just 50 aircraft represents over 4,000 person-years of unemployment across Canada."

Tellier called upon the whole Canadian aerospace industry to tell its compelling story across the country in support of a comprehensive policy. He added that in due course, Bombardier would put forward its own proposals to that effect.

Speaking in Vancouver at a Board of Trade luncheon, Mr. Tellier also emphasized Bombardier's presence in BC through the SkyTrain and the West Coast Express, which play an important role in Greater Vancouver's public transportation system and have impacted the dynamic growth of the city.

Mr. Tellier described Canada's transportation industry in general as one of the country's major economic assets and praised the federal government for its export development and technology partnership programs.

FMI: www.aerospace.bombardier.com

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