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Airbus takes majority stake in Bombardier airliner

October 17, 2017

Airbus will acquire a majority stake in Canadian firm Bombardier's C Series airliner program. The deal follows the US administration slapping massive duties on Bombardier CS100 and CS300 aircraft imported into the US.

Flugzeug Bombardier CS100
Image: picture-alliance/dpa/Bombardier

Airbus will take approximately 50.01 percent of the shares in CSALP, the entity which manages the C Series program, with Bombardier and Investment Quebec holding 31 and 19 percent, respectively.

Canada now becomes Airbus's fifth home country and first outside Europe. The C Series headquarters will remain in the Montreal area, but a second assembly line for the 100- to 150-seat plane will be set up at Airbus's facility in Alabama.

Neither company will contribute cash to the new venture and will take on any debt.

"It's a win-win deal for everyone," said the president of Airbus, Tom Enders, adding that the partnership would secure industrial operations in Canada, Britain and China and bring new jobs to the US.

"I have no doubt that our partnership with Bombardier will boost sales and the value of this program enormously."

By adding the C Series to its lineup of larger jetliners, the Toulouse-based Airbus adds to its portfolio and gains access to an advanced aircraft that cost Bombardier over $6 billion (€5.1 billion) to develop.

Bombardier CEO Alain Bellemare said Airbus is the perfect partner for the company, Quebec and Canada.

"Their global scale, strong customer relationships and operational expertise are key ingredients for unleashing the full value of the C Series," he said in a statement. "This partnership should more than double the value of the C Series program and ensures our remarkable game-changing aircraft realizes its full potential."

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We have lift-off

Earlier Bombardier was reportedly looking for investors and considering selling parts of its aerospace business, including its Q400 turboprop and CRJ regional-jet unit.

Analysts said the deal could breath new life into a slow-selling plane and open a new front in the battle with US aerospace firm Boeing over global aircraft sales.

The deal also remakes the aerospace landscape by putting Airbus's global position behind the C Series, for which Bombardier hasn't won a major order in 18 months. It is seen enabling big production savings on the C Series aircraft by allowing Bombardier to make use of Airbus's international sales reach.

The C Series program - which was overdue and over-budget - has been a crucial part of Bellemare's five-year turnaround plan aimed at improving cash flows and increasing profit growth. The Quebec government acquired a 49.5 per cent stake in the C Series program for $1 billion in 2015.

In the line of duties

The transaction also puts Airbus into the center of Bombardier's ongoing trade dispute with rival Boeing.

Boeing has accused Bombardier of manufacturing its 100-150 seat planes with the help of public subsidies and selling them at a loss to Delta Air Lines.

The US Commerce Department recently announced it would impose an 80 percent duty on Bombardier's exports to the US, on top of duties of nearly 220 percent.

jbh/rc (AFP, AP)