Airbus to gain control of Bombardier’s CSeries jets July 1
Airbus SE sealed its control of Bombardier Inc.’s CSeries, ushering in a new era for a plane with cutting-edge technology but a spotty sales record.
The European planemaker will hold a majority stake in the partnership, with the deal set to close and take effect July 1, according to a statement on Friday. All regulatory approvals have been obtained.
Airbus’s takeover of the CSeries sharpens a clash with Boeing Co. for dominance in the lucrative market for single-aisle jetliners. Bombardier CEO Alain Bellemare has predicted that C Series sales will accelerate because of Airbus’s marketing reach, while costs will drop thanks to the European planemaker’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 $2 billion over budget in developing the plane.
Bombardier struck the deal with Airbus in October in the midst of a bitter trade dispute in the U.S. 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 U.S. International Trade Commission ruled that American industry wasn’t being harmed by the C Series.
A STEP UP
Bombardier spent more than $6 billion to develop the CSeries after launching it in 2008, equipping the aircraft with fuel-efficient engines, large windows and a wider-than-usual middle seat. Passenger capacity ranges from 108 to 160, a step up in size from Bombardier’s signature regional jets.
In exchange for taking control of the plane program, Airbus has agreed to provide procurement, sales and marketing expertise to the C Series Aircraft Limited 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 shares fell 1 percent to 98.66 euros at 9:10 a.m. in Paris, giving a market value of 77 billion euros (US$91 billion).
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 U.S. customers. In the event of cash shortfalls, Bombardier had agreed to provide funding of up to $700 million for the C Series over the three years that follow the closing. The final agreement adds $225 million to that total, and increases the period to 3 1/2 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 CSeries program continues to ramp up,” the companies said in the statement, adding that deliveries are expected to double this year from 17 aircraft in 2017.