Ottawa nixes airport expansion in blow to Bombardier

Bombardier shares dipped Friday after Canada's transport minister nixed plans for a small Toronto airport's expansion, which would have earned the manufacturer billions in new jetliners.

Regional carrier Porter Airlines had been lobbying since 2013 for extension of the runway at the Billy Bishop airport in order to accommodate new Bombardier CSeries jetliners.

Transport Minister Marc Garneau said Ottawa would not reconsider the agreement with the city of Toronto and port authority which restricts takeoffs and landings to small turboprop aircrafts at the downtown airport located on an island.

"We will not re-open tripartite agreement for YTZ," he said in a Twitter message late Thursday, using the world airport code for the landing strip.

Bombardier shares fell almost five percent in morning trading to Can$1.32 following the announcement.

The expansion would have allowed Porter Airlines, the airport's main user, to fly to more destinations in North America.

Porter signed a tentative agreement with Bombardier in 2013 for up to 30 CS100 passenger jets for US$2.08 billion.

However, that deal is dead if the runway is not extended by 168 meters into water at each end to accommodate the larger 107-seat aircrafts.

The airport expansion proposal had drawn sharp opposition from nearby waterfront residents who feared increased air traffic noise.

Ottawa, meanwhile, has not yet announced whether it will provide Bombardier with financial assistance to carry it through the expensive development of the CSeries jets, which are to go head-to-head with the workhorses of the aviation industry, Boeing's 737 and Airbus's A320.

The project is over budget and two years behind schedule, and Quebec province last month injected US$1 billion into Bombardier to help it get the planes off the ground. They are currently scheduled to enter commercial service and carry their first passengers for Lufthansa subsidiary Swiss in the middle of next year.

Prime Minister Justin Trudeau said Thursday "we're still in the process of trying to decide whether or not there's a strong business case" for a government loan or investment in the company.

Innovation, Science and Economic Development Minister Navdeep Bains is likely to make a decision in the coming week, a government spokesman told AFP.