Quebec aerospace industry expects benefits from Boeing jet deal

24 November 2016

Aerospace companies in the Canadian province of Quebec will likely benefit from in-service support contracts linked to a federal government purchase of 18 Boeing Co (BA.N) Super Hornets, an industry group said on Wednesday.

On Tuesday, Canada's Liberal government said it would initiate talks with Boeing to soon acquire Super Hornets as a stop-gap measure while preparing an open, five-year competition to replace its aging fleet of fighter jets.

While the terms of a Super Hornet deal are not yet clear, the purchase could generate new in-service support contracts for industry in Canada's aerospace hub of Quebec, where CF-18s are now maintained, said Suzanne Benoit, director general of Aero-Montreal.

"Quebec is well positioned for all aspects of services support and other specialized areas related to this type of aircraft," Benoit said in a statement.

Boeing has said it is committed to giving Canadian companies contracts as a result of the deal.

One aerospace analyst suggested Montreal-headquartered CAE Inc (CAE.TO) would likely benefit as it could partner with Boeing to deliver training.

Simulator-manufacturer CAE works with L-3 MAS, a Quebec-based division of L-3 Communications Holdings Inc (LLL.N), to provide in-service support for the aging CF-18s.

CAE spokeswoman Pascale Alpha said in an email the company wants to provide support for both the existing CF-18 fleet, and future Super Hornets aircraft.

"We have the experience to do that," she wrote. "We believe we are in the best position to (also) provide the training for the fleet of Super Hornets to Canada."

Canada's Procurement Minister Judy Foote has said details about the in-service support component of a Super Hornets procurement would be known next year.

Canada intends to buy the 18 Super Hornets outright, as opposed to leasing them or purchasing them with a buyback provision, a source familiar with the matter said.

Replacing the CF-18 jets - some of which have been flying for 35 years - has been repeatedly put off.

Canada's former Conservative government said in 2010 it would buy 65 F-35 jets from Boeing rival Lockheed Martin Corp (LMT.N) for C$9 billion ($6.7 billion). During last year's election campaign, the Liberals vowed not to buy the planes on the grounds they were too costly.

Lockheed has given Canadian firms about $1 billion in development and production work on the F-35 fighter jet program.