Feds sign $105-million deal with Bombardier for two new Challenger jets

By Finance News On Jul 21, 2022

The federal Liberal government has inked a sole-source deal with Quebec aerospace firm Bombardier to purchase two new Challenger jets to replace half the existing executive aircraft fleet of the Canadian Armed Forces.

The $105-million contract follows recent warnings from defence officials that two of the military’s four existing aircraft would no longer be allowed to fly in many countries within a few years because of outdated technology.

It also comes after Bombardier announced Friday that it was slashing 2,500 jobs from its aviation division as demand for private jets has plummeted due to the economic impacts of the COVID-19 pandemic.

Yet the decision to purchase the two new Challenger 650s could stoke criticism as governors general, prime ministers and cabinet ministers have been routinely accused in the past of using the small private jets as personal flying taxis.

New planes to arrive this summer

The Department of National Defence announced the deal with Bombardier on Saturday, saying the new planes, along with a supply of spare parts and initial training for military personnel, will be delivered this summer.

“We are really pleased to be able to announce that we’re going to purchase two new Challenger 650s from Bombardier,” said the Defence Department’s deputy minister, Jody Thomas.

“It was an excellent confluence of timing. We needed the planes with the regulatory changes.”

Due to more congested airspace and the incorporation of newer digital technology such as GPS in air-traffic control, countries around the world are phasing in new standards requiring modern navigation systems on all aircraft.

While two Challengers purchased by the federal government in the early 2000s have relatively modern systems, the two Challengers purchased in the 1980s don’t meet the new standards.

Ottawa bought itself some time when it inked an agreement in December that lets the two older jets continue to fly in the U.S., but other countries are starting to bring in the same standards. Canada will implement the standards between 2021 and 2023.

Planes similar to existing Challenger fleet

Thomas defended the decision to purchase the planes from Bombardier without a competition. The new planes are similar to the military’s existing Challengers, she said, which will allow them to be seamlessly integrated into the Royal Canadian Air Force.

“It made sense to buy Canadian capability when there is an innate Canadian capability,” she said. “And these planes actually will fit into the fleet very easily. The same technicians. The pilots will be able to fly both types of planes.”

Thomas denied the purchase amounted to a handout to Bombardier as it faces massive layoffs. Rather, she said the government saw an opportunity as the two planes were “on the line” and ready to be snapped up.

While online searches suggest the going rate for a Challenger 650 is around $40 million, Thomas said the full $105-million contract includes spare parts and training.

“We…