Airbus takes key stake in Bombardier’s C-series jet business

Bombardier has agreed to a joint venture with Airbus for its C-Series het jet business in the wake of US tariff ruling.

Quebec Deputy Premier Dominique Anglade, Bombardier CEO Alain Bellemare, Airbus Canada president Romain Trapp in Montreal yesterday.

In a major retreat for Canada’s flagship transportation company, Bombardier says it has agreed to a joint venture with Airbus for its most important commercial jet business in the wake of a crippling tariff ruling by the US and sluggish sales for the aircraft.

The companies said Airbus would acquire a 50.01 per cent stake in Bombardier’s C-Series jets. Airbus chief executive Tom Enders said the company was not investing any money upfront for its majority stake, but it would provide ongoing funding support.

When the partnership deal closes, Bombardier will be left with a 31 per cent stake in the C-Series, a major concession following the company’s billions of dollars of investment and decade-long development of an aircraft line, meant to strengthen its position in the global aerospace sector.

The proposed deal would intensify competition between the Airbus and Boeing and potentially inflame a trade dispute between the US and Canada over alleged state subsidies to Bombardier by having some Canadian-developed jets assembled on American soil. The US Commerce Department’s preliminary decision to hit Bombardier with tariffs that would quadruple the price of a C-Series aircraft in the US came after Boeing complained of predatory pricing.

The deal would also mark the biggest shake-up in the commercial jet market since Boeing bought rival McDonnell Douglas in 1997.

Canada’s Innovation Minister, Navdeep Bains, said the Airbus-Bombardier pact would be subject to a review under the country’s foreign investment laws. Under Canadian law, the government reserves the right to reject a foreign takeover or investment.

However, Mr Bains said that “on the surface”, the Airbus deal for Bombardier’s C-Series “would help position the C-Series for success by combining excellence in innovation with increased market access and an unrivalled global sales force.”

Canada’s Trade Minister Francois-Philippe Champagne went further, telling reporters the deal could “save” the Canadian aerospace sector, which employs over 200,000 people across the country. Bombardier’s chief Alain Bellemare said the partnership would allow it to sidestep heavy tariffs imposed by the US over allegations that it selling CSeries planes at below market prices. Airbus plans to expand its jet production facilities in Alabama to build C-Series jets for US buyers.