Bombardier Inc.
A Bombardier C series plane takes off on a runway.

Airbus Seals Bombardier C Series Deal in Challenge to Boeing

June 8, 2018
Airbus’s takeover of the C Series sharpens a clash with Boeing Co. for dominance in the lucrative market for single-aisle jetliners.

Airbus SE sealed its control of Bombardier Inc.’s C Series, 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 C Series 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 C Series 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% to 98.66 euros at 9:10 a.m. in Paris, giving a market value of 77 billion euros (US$91 billion).

Quebec HQ to Remain

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 C series 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.

By Frederic Tomesco

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Licensed content from Bloomberg, copyright 2016.

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