Airbus Takes Control of CSeries

Bombardier announced Monday it has sold a 50.01 percent interest in its CSeries passenger jet business to Airbus for no cost.

With this deal, Bombardier would retain 31 percent with the remaining 19 percent being held by the Quebec government’s investment agency.

This comes after the U.S. Commerce Department announced it would impose an 80% duty in addition to the already staggering 220 percent levied after a Boeing complaint which charged that the company was selling the CSeries below cost and receiving significant government subsidies.

It is possible that this latest move by Bombardier could mitigate the Boeing claim because part of the deal will result in the manufacturing of the 100-150 seat version of the aircraft at the Airbus plant in Alabama.

Airbus CEO Tom Enders claims that an aircraft that is manufactured in the U.S. will not be subject to duties and can be sold in the U.S.

With this merger Airbus fills a hole in its product line with a state of the art aircraft with very little downside. Enders said the talks started in August and were not driven by what competitors are doing. He said that since their initial interest in the CSeries three years ago circumstances have changed, highlighting that the plane is now certified and receiving excellent customer and industry feedback.

Bombardier CEO Alain Bellemare said having Airbus as a strategic partner “increases confidence that the aircraft is here to stay.”

As part of the deal, Airbus will have the right to purchase the entire CSeries business from Bombardier in 2025. This reciprocal deal would also give Bombardier the option to buy back its shares at that time at a value agreed upon by both parties.

The news of the deal has been very positive causing Bombardier stock to rise more than 15% on Tuesday.

Source…cbc.ca

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