Monday, October 16, 2017
Is Airbus Flying to Bombardier's Rescue?
CBC is reporting that European aircraft consortium, Airbus, will acquire a majority stake in Bombardier's C-class jetliner project.
Boeing has tried to kill off the C-class aircraft using its clout to trigger punitive tariffs totalling nearly 300 per cent even though the Bombardier aircraft is of a different class to anything Boeing has on offer.
The deal may rescue the C-class - and Bombardier - but Airbus is exacting a stiff price.
The two aircraft manufacturers announced the partnership Monday evening, weeks after the United States announced 300 per cent preliminary duties on exports of the aircraft following a complaint from Airbus rival Boeing.
The partnership is expected to result in significant CSeries production cost savings by leveraging Airbus's supply chain expertise, but Airbus won't be paying any money for the acquired stake.
Airbus will acquire a 50.01 per cent interest in the CSeries Aircraft Limited Partnership, which manufactures and sells
Bombardier will own 31 per cent and the Quebec government's investment agency will hold 19 per cent.
Still, 49.99 per cent of profits on a viable and perhaps expanded aircraft programme is a lot better than 100 per cent of nothing.
The possible snag in the deal, at least for Canadian aerospace, is a rumoured provision that Airbus gets the entire C-series project in five years. That would seem to leave Bombardier and the government of Quebec five years to recoup their investment before Airbus swallows the C-series jetliner.
As for Canadian manufacturing jobs there is also talk of building the C-series in Alabama for American customers. Because nothing says high skilled manufacturing like Alabama.
Was this a good strategic move for Bombardier or a capitulation in the face of possible ruin?