August 7, 2004
Subsidiary of troubled U.S. airline to use federal funds to buy regional jets.
Ottawa: The Liberal government announced
late yesterday that two federal Cabinet ministers have approved a “loan
of less than $250-million” to a Delta Air Lines subsidiary so it can
buy 10 regional jets from Bombardier Inc. of Montreal.
The deal, using taxpayers’ money from the government-owned Export
Development Corporation and its high-risk political loan fund known as
“the Canada Account,” was announced by Jim Peterson, the International
News of the Canada Account loan deal emerged as Delta Air Lines’ shares
sank to their lowest level in 20 years on U.S. stock markets after the
airline was hit with another credit-rating downgrade and fears that it
is heading for bankruptcy.
The Canadian loan will help wholly owned Delta subsidiary Comair, a
regional airline, purchase 10 Bombardier CRJ regional jets to add to
its existing fleet.
The loan repayment terms are secret, but Andre Lemay, a spokesman for
the Foreign Affairs and International Trade department, said it is
secured by the aircraft as collateral and does not breach world trade
regulations on subsidies.
If Delta or ComAir default, Bombardier will incur a significant loss, he said.
Mr. Peterson is on vacation and unavailable to answer questions about the deal.
In a news release issued by Mr. Peterson’s director of communications,
Jacqueline LaRocque, who was also on vacation yesterday, Mr. Peterson
was quoted as saying the deal was “structured in accordance with
“Bombardier and the aerospace industry are important to our economy,
our regions and our communities,” Mr. Peterson’s news release stated.
“Canadians should be proud. Canada’s aerospace industry is one of the largest in the world.”
Mr. Peterson said the loan was the first transaction under a
$1.2-billion Canada Account fund created in July, 2003, to support
regional jet sales.
The Canada Account loans to Comair were also approved by Finance
Minister Ralph Goodale. EDC officials execute and administer such loans