Bombardier’s C Series has received a huge boost with Airbus to become a partner and majority shareholder in the aircraft program.
Under the terms of the deal announced on Monday night (European time), Airbus would acquire a 50.1 per cent stake in the C Series program, with Bombardier to hold 31 per cent and Investissement Québec (IQ) 19 per cent.
Further, the companies said in a joint statement the C Series will also be built at Airbus’s Mobile, Alabama final assembly line for serving US customers, which would add a second final assembly line to the program alongside Bombardier’s existing facility in Quebec, Canada.
The joint statement said Airbus would provide procurement, sales and marketing, and customer support expertise to the C Series Aircraft Limited Partnership (CSALP), the entity that manufactures and sells the C Series. CSALP’s headquarters would remain in Quebec.
The C Series features two variants – the CS100 designed to seat 110 passengers in a single-class configuration and the larger CS300 which is configured for 135 passengers, based on 32in seat pitch.
Powered by Pratt & Whitney’s PW1500G geared turbofan, the C Series competes for the lower end of the narrowbody market alongside the Embraer E2 and Mitsubishi Regional Jet, and to a lesser degree designs from Sukhoi and COMAC.
“Ranging from 100 to 150 seats, the C Series is highly complementary to Airbus’ existing single aisle aircraft portfolio, which focuses on the higher end of the single-aisle business (150-240 seats),” the statement said.
Airbus chief executive Tom Enders described the deal as a “win-win for everybody”, stating the partnership would secure the C Series program in Canada, the United Kingdom (where the aircraft wings are manufactured) and China and also bring new jobs to the United States.
“The C Series, with its state-of-the-art design and great economics, is a great fit with our existing single-aisle aircraft family and rapidly extends our product offering into a fast growing market sector,” Enders said in a statement.
“I have no doubt that our partnership with Bombardier will boost sales and the value of this programme tremendously.”
Bombardier president and chief executive Alain Bellmare said Airbus was the “perfect partner” for the company and would ensure the “sustainability and growth of the C Series programme”.
“Their global scale, strong customer relationships and operational expertise are key ingredients for unleashing the full value of the C Series,” Bellmare said.
“This partnership should more than double the value of the C Series program and ensures our remarkable game-changing aircraft realizes its full potential.”
Meanwhile, Québec Deputy Prime Minister, Minister of Economy, Science and Innovation and Minister responsible for Digital Strategy Dominique Anglade said the deal was the “best solution to ensure the maintenance and creation of jobs in this strategic sector of the Québec economy”.
At face value, the transaction helps expand Airbus’s product line at the bottom end of the narrowbody market, given the lack of demand for its A319, which hasn’t had an order since 2012.
The C Series struck controversy earlier in 2017, when Boeing complained to the US government Bombardier sold the aircraft to Delta Air Lines at unfairly low prices in what it alleged amounted to price dumping. Further, Boeing alleged the C Series benefitted from what it said were illegal subsidies from the governments of Canada and the UK.
Boeing’s complaint also claimed the C Series threatened the viability of its 737 MAX 7 variant.
The US Department of Commerce upheld the complaint and has slapped a 79.82 per cent tariff on the C Series being imported to the US.
Delta has ordered 75 CS100s. The airline also has options over a further 50 aircraft. Boeing alleged Delta paid about US$20 million per aircraft, which it said cost Bombardier US$33.2 million to make. Bombardier vice president of commercial operations Ross Mitchell has previously described the US$20 million figure as “way off”.
The transaction was expected to close in the second half of 2018. Under the new board, Airbus will be able to appoint four members and name the chairman, Bombardier will have two nominees and IQ one.
Currently, Bombardier has a 62 per cent stake in the C Series programme, with IQ holding the remaining 38 per cent.
