(Bloomberg) -- Bombardier Inc. indicated it could pull out of the joint venture with Airbus SE that makes the A220 jetliner as the program’s costs increase.
The Canadian company said Thursday a ramp-up in production at the Airbus Canada Ltd. Partnership that manufacturers the plane will require additional cash investment, pushing back the break-even point and generating lower returns across the lifetime of the project.
As a result, and following its exit from other commercial aerospace activities, Bombardier is “reassessing its ongoing participation” in the A220, the Montreal-based business said in an earnings update. The value of the joint venture is also likely to be diminished and Bombardier will disclose the amount of any writedown when it reports final 2019 results.
Airbus said in response to questions that it will continue funding the A220 program “on its way to break-even.” The European planemaker took control of Bombardier’s C Series model in 2018, renaming it the A220 in line with other models. It owns a 50.01% stake in the regional jet, with the Canadian company holding 31%, and state-backed Investissement Quebec some 19%.
Bombardier spent over $6 billion developing the C-Series, equipping it with fuel-efficient engines, composite wings and larger than usual windows. The program ran more than two years late and about $2 billion over budget.
The jet added 63 orders in 2019, with 105 currently in service and a backlog of close to 500 planes. Airbus will begin producing the A220 on a second assembly line at its Mobile, Alabama, plant this year.
To contact the reporter on this story: Siddharth Philip in London at sphilip3@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper, Tony Robinson
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