The federal government is moving to strengthen Canada’s domestic defence industry, with Industry Minister Melanie Joly announcing over $900 million in funding for defence innovation on Monday. The investment will target drone technology and a new Bombardier (TSX:BBD.B) aircraft.
Announced in Ottawa alongside Defence Minister David McGuinty and Stephen Fuhr, Secretary of State for Defence Procurement, the funding is part of the government’s new defence industrial strategy unveiled in February. That broader plan commits $6.6 billion over five years to prioritize domestic production, double Canada’s defence exports, and create 125,000 jobs over the decade.
The latest injection will flow through the National Research Council (NRC). More than $500 million is allocated for a new Canadian-built Bombardier Global 6500 aircraft to support defence-related technology development, along with the creation of a Drone Innovation Hub in Ottawa and Montreal. An additional $161 million over five years is earmarked for quantum technology development.
“We are living in a much more chaotic and dangerous world, and we know that national security and economic security really go hand in hand,” Joly told reporters.
For investors, the significance of this government contract extends beyond the immediate order. Bombardier has undergone a complete transformation in recent years, shedding its cumbersome debt load and unrelated business lines to focus exclusively on high-end business jet manufacturing.
The financial results reflect this turnaround. The company posted 2025 revenue of $9.6 billion, a 10% increase, with adjusted EBITDA reaching $1.6 billion. Free cash flow hit $1.1 billion, while backlog climbed to approximately $17.5 billion, providing strong visibility on future deliveries. Management expects to deliver more than 157 aircraft in 2026, with revenue exceeding $10 billion. Trading at roughly 21 times trailing earnings, the valuation appears reasonable if the company maintains its execution.
Bombardier’s competitive moat rests on its product lineup. Demand remains robust for its Challenger and Global series jets, with new models consistently setting performance benchmarks. The Global 7500 has captured speed records on routes including New York-London and Tokyo-Los Angeles, completing Los Angeles to New York in just 3 hours and 54 minutes. It also holds the ultra-long-range record for a non-stop Sydney-to-Detroit flight. The Global 8000, approaching Mach 0.95, stands as the fastest civilian aircraft since the Concorde. These records signal product differentiation and sustained demand.
The government contract does more than boost defence revenue—it reinforces Bombardier’s position as a strategic national asset. With the defence industrial strategy expected to drive continued investment, the company is well-positioned to access further support for dual-use technologies. Given that a significant portion of its sales are U.S. dollar-denominated, Bombardier also offers investors direct exposure to any potential loonie weakness.
Bombardier sits at a critical inflection point. The company has executed a difficult turnaround, delivered improving financials, and earned market validation for its products. Canada’s new defence strategy now adds policy support and a high-profile order to the narrative. While global trade tensions and supply chain challenges remain risks, Bombardier’s focused strategy, leading products, and emerging role in national defence establish a foundation for long-term value. Monday’s $900 million announcement and its Bombardier component mark just the opening chapter.
