Abu Dhabi, UAEThursday 20 June 2019

Bombardier C Series deal a "win-win", says Airbus chief executive

Deal to ease threat of job losses at Bombardier's Northern Ireland facilities

The deal should head off a US threat in September to impose a 300 per cent tariff on the Canadian jet manufacturer’s C Series planes. Pascal Rossignol/ Reuters
The deal should head off a US threat in September to impose a 300 per cent tariff on the Canadian jet manufacturer’s C Series planes. Pascal Rossignol/ Reuters

Airbus chief executive Tom Enders has described the company’s deal to acquire a majority shareholding in Bombardier’s under-threat C Series jet programme as a “win-win” – helping safeguard Bomardier jobs in Northern Ireland and expanding Airbus’s manufacturing footprint.

The deal, in which Airbus acquires a 50.1 per cent stake in the C Series Aircraft Limited Partnership (Csalp), should head off a US threat in September to impose a 300 per cent tariff on the Canadian jet manufacturer’s C Series planes because, under the new partnership, jobs will be created in the United States.


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“Not only will this partnership secure the C Series and its industrial operations in Canada, the UK and China, but we also bring new jobs to the US,” said Mr Enders. “Airbus will benefit from strengthening its product portfolio in the high-volume single-aisle market.”

Airbus said its global industrial footprint will expand via Bombardier, with the final assembly line in Canada and additional C Series production at the Airbus manufacturing site in Alabama.

“This is a win-win for everybody,” Mr Enders added. “The C Series, with its state-of-the-art design and great economics, is a great fit with our existing single-aisle aircraft family and rapidly extends our product offering into a fast growing market sector. I have no doubt that

our partnership with Bombardier will boost sales and the value of this programme


The agreement, announced yesterday, brings together Airbus’ global reach and scale with Bombardier’s newest jet aircraft family, positioning both partners to fully unlock the value of the C Series platform and “create significant new value for customers, suppliers, employees and shareholders”, the companies said.

Under the terms of the deal, Csalp’s headquarters and primary assembly line and related functions will remain in Québec. “This strengthening of the programme and global co-operation will have positive effects on Québec and Canadian aerospace operations,” Bombardier said. The deal was welcomed in Northern Ireland, where thousands of jobs had been at risk.

Democratic Unionist Party leader Arlene Foster said it was “significant news” for Bombardier, which employs more than 4,000 people at its Belfast factories and is due to begin delivering a blockbuster order for up to 125 new C Series jets to

Atlanta-based Delta Air Lines next year, an order that was made in 2016.

But Moody’s vice president and senior analyst Jamie Koutsoukis said that Bombardier is not out of the woods yet financially. “The debt load is still very onerous considering the capital intensive nature of their business,” he said.

The C Series will not be profitable until 2020 and Bombardier last year had been expected to sink another US$2 billion into the programme.

The company also announced in May 2016 that it would take a $500 million charge in the second quarter of the year on 127 aircraft, meaning the planes that went to Delta were probably sold at a loss of up to $4m per jet, according to

Business Insider.

The single-aisle market is a key growth driver, representing 70 per cent of the expected global future demand for aircraft. Ranging from 100 to 150 seats, the C Series will complement Airbus’ existing single-aisle aircraft portfolio, which focuses on the higher end of the single-aisle business, consisting of 150 to 240 seats.

Additionally, Airbus’ supply chain expertise is expected to generate significant production cost savings for C Series.

“Airbus is the perfect partner for us, Québec and Canada,” said Bombardier’s chief executive Alain Bellemare.

“This partnership should more than double the value of the C Series programme and ensures our remarkable game-changing aircraft realises its full potential.”

The move by Airbus provides the support the C Series programme was lacking; the cost of the platform’s development, delays in delivery, and the threat of potentially crippling US tariffs had some analysts wondering about the long-term future of the


For much of its decade-long history, the C Series had been beset with a string of troubles. The aircraft was two years late and about $2bn over budget.

The Airbus transaction has been approved by the boards of both Airbus and Bombardier, as well as the cabinet of the government of Québec.

“In the current context, the partnership with Airbus is, for us, the best solution to ensure the maintenance and creation of jobs in this strategic sector of the Québec economy,” said Québec’s deputy prime minister Dominique Anglade.

The deal remains subject to regulatory approvals but completion is currently expected for the second half of 2018, Airbus said.

The plane maker said it expects Bombardier to continue with its current funding plan of Csalp but said it will fund, if required, any cash shortfalls of Csalp during the first year following the closing of the deal up to a maximum $350m, and during the second and third years of $350m over both years, in return for shares of Csalp with cumulative annual dividends of 2 per cent.

If more cash is needed, Airbus said, that would be equally provided among the shareholders.

With agencies

Updated: October 17, 2017 08:20 PM