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An employee works on an Airbus A220-300 at a facility in Mirabel, Que., on Feb. 20, 2020.Christinne Muschi/Reuters

The Quebec government is pumping more money into its manufacturing partnership with Airbus SE on the A220 jetliner, a move that buys it more time as the company tries to bring the program to profitability amid strong demand for the aircraft.

Quebec will add another US$300-million to its initial investment of US$1-billion in the limited partnership, while Airbus commits another US$900-million, the partners said in a statement on Friday. The money will be used to accelerate the production rate of the aircraft in the months and years ahead as Airbus delivers on a strong order book for the plane, they said.

Boosting its investment allows Quebec to remain a shareholder in the venture for an additional four years to 2030, the partners said. Under the previous deal, Airbus had a right to buy out Quebec’s share in 2026.

“This investment reinforces Quebec’s position in its partnership with Airbus,” said Pierre Fitzgibbon, the province’s minister of economy and innovation. He added that without the financial injection, Quebec risked being pushed out of the ownership structure.

“We obtain longer-term commitments and we have a better chance of recovering our initial investment.”

Background: Bombardier exits commercial aviation as Airbus, Quebec take remaining A220 stake

The A220, a single-aisle plane seating 100 to 150 people, is the former C Series airliner developed by Bombardier Inc. at a cost of more than US$6-billion. It was the biggest research and development effort in company history, a nearly two decades-long push funded in part by public money with the aim to put Bombardier at the cutting edge of global passenger-jet manufacturing.

The plane was two years late to market and US$2-billion over budget, and Bombardier misjudged how aggressive its rivals would be. After searching for a partner to help fund the venture, Bombardier turned to Airbus in 2018, handing over control for a nominal fee.

Quebec, which had invested US$1-billion in the program to help Bombardier avoid a financial collapse, later boosted its share to 25 per cent. Airbus owns the other 75 per cent.

Airlines are making good use of the fuel-efficient A220 narrow-body jet in the current economic crisis, Airbus chief executive officer Guillaume Faury said in a statement. About half of the A220 fleet globally was still flying during the initial months of the pandemic in 2020, while three airlines kept almost all of their A220 planes operating, according to Airbus.

The company has received 668 orders for the plane in all, and had delivered 193 at last count. Airlines that have bought the jet include Air Canada, Air France and Delta Air Lines.

However, the A220 program remains a money-losing proposition from a manufacturing perspective, both for Quebec and for Airbus. The province has taken a mandatory accounting provision against future losses and says the current book value for its stake is zero.

Mr. Fitzgibbon said he is confident the program will generate returns for the province as delivery of the planes accelerates.

Airbus needs to increase production from the current five units a month to boost profit margins as it moves through the learning curve that comes with building an all-new jet. That won’t happen as quickly as planned because of work slowdowns and delivery adjustments related to COVID-19, company executives said last year.

Airbus, which is based in Toulouse, France, estimates it will break even on the A220 in the middle of the decade. The airliner is built in the Montreal suburb of Mirabel, Que., and Mobile, Ala.

With the investment, Quebec obtained more formalized contract language requiring Airbus to keep production of the A220 in Mirabel, Mr. Fitzgibbon said. He called that aspect a key win as the government tries to boost wealth by creating and maintaining high-paying jobs. Airbus employs about 2,500 people in the province.

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