Airbus seals Bombardier joint venture

Bloomberg

Sat, Jun 09, 2018 - Page 10

Airbus SE has sealed its control of Bombardier Inc’s C Series, ushering in a new era for a plane with cutting-edge technology, but a spotty sales record.

The European plane maker is to hold a majority stake in the partnership, with the deal set to close and take effect on July 1, according to a statement yesterday.

All regulatory approvals have been obtained.

Airbus’ takeover of the C Series sharpens a clash with Boeing Co for dominance in the lucrative market for single-aisle jetliners.

Bombardier chief executive Alain Bellemare has predicted that C Series sales would accelerate because of Airbus’ marketing reach, while costs are to drop thanks to the European plane maker’s clout with suppliers.

Boeing is seeking to forge a commercial-aircraft alliance with Brazil’s Embraer SA, Bombardier’s main competitor.

Canada’s biggest aerospace company designed the C Series to crack the Boeing-Airbus duopoly in single-aisle commercial aircraft, but the Montreal-based manufacturer was more than two years late and about US$2 billion over budget in developing the plane.

Bombardier struck the deal with Airbus in October last year in the midst of a bitter trade dispute in the US with Boeing, which complained the Canadian plane had received illegal government aid that helped it undercut competitors in a sale to Delta Air Lines Inc.

Bombardier won relief in January when the US International Trade Commission ruled that US industry was not being harmed by the C Series.

In exchange for taking control of the plane program, Airbus has agreed to provide procurement, sales and marketing expertise to the C Series Aircraft Ltd Partnership, the entity that manufactures and sells the jet.

Airbus executives have said they would look to extract savings from all C Series suppliers to lower the program’s production costs.

Airbus has pledged to keep the headquarters and primary assembly of the C Series in Mirabel, Quebec.

The companies are planning to build a secondary plant in Alabama — adjacent to an existing Airbus facility that builds the A320 narrow-body — to serve US customers.

In the event of cash shortfalls, Bombardier had agreed to provide funding of up to US$700 million for the C Series over the three years that follow the closing of the deal.

The final agreement adds US$225 million to that total and increases the period to three-and-a-half years.

Air Baltic’s order for 30 C Series jets, announced last month, brings to 402 the number of firm commitments for the aircraft’s two variants.

“The C series program continues to ramp up,” the companies said in the statement, adding that deliveries are expected to double this year from 17 aircraft last year.