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Bombardier president and CEO Alain Bellemare, left, Quebec Deputy Premier Dominique Anglade and Airbus executive Romain Trapp at a press conference in Montreal on Oct. 16, 2017.Paul Chiasson/The Canadian Press

Bombardier Inc. has struck an agreement to sell control of its marquee C Series airliner program to Europe's Airbus Group SE, a bet that handing the keys to a better-financed global giant will ensure the Canadian plane maker's future in the face of relentless competition and punishingly high tariffs imposed by the United States.

The C Series program, Bombardier's big venture to drive commercial aerospace revenue over the next two decades, has been at the centre of major political and investor drama in Canada since its inception. The single-aisle airliner's development at a cost of $6-billion (U.S.) drove Bombardier to the brink of bankruptcy in 2015 before Quebec handed the company a lifeline by investing $1-billion in the plane.

Quebec supports the transaction with Airbus, calling it the best solution to protect and create jobs in a sector vital to the province's economy. Caisse de dépôt et placement du Québec, a major Bombardier shareholder, backs the tie-up. Ottawa has also offered a preliminary endorsement of the transaction, saying it would require review under federal investment law.

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"[This deal] brings certainty to the future of the program," Bombardier chief executive Alain Bellemare told reporters on a conference call late Monday after the agreement was announced. "It increases the level of confidence that the aircraft is here to stay."

Although Bombardier itself has not been sold, the deal is an acknowledgment that the company could not go it alone on the global market for passenger airliners.

Boeing Co. is suing Bombardier, saying it benefited from unfair government subsidies that allowed it to sell the C Series at "absurdly low" prices in the United States. The trade challenge is widely seen as a cynical bid to kill the aircraft's prospects in the United States and threaten jobs in Britain, where Bombardier builds C Series wings. The U.S. Department of Commerce has slapped preliminary duties of nearly 300 per cent on Bombardier C Series planes. Brazilian rival Embraer SA has also launched a trade challenge against the Canadian plane maker.

In 2015, Bombardier turned to Airbus as a potential partner to keep the C Series alive amid a major cash crunch, but talks fell apart after they were leaked to the media. The Canadian plane maker is turning to Airbus again now for financial and institutional heft as the battles with Boeing and Embraer grow more intense.

"The stars were all aligned this time," Airbus chief executive Tom Enders said. "I have no doubt that our partnership with Bombardier will boost sales and the value of this program tremendously."

Under the agreement, Airbus said it will take a 50.01-per-cent interest in the C Series limited partnership for no cash consideration as the C Series becomes part of Airbus's aircraft product lineup. In exchange, it will offer Bombardier's 100- to 150-seat plane its global procurement, sales and marketing and customer support expertise. Bombardier's stake will be 31 per cent and Quebec will own about 19 per cent when the deal is finalized.

Bombardier will continue to fund the plane's early production through the limited partnership as well as any cash shortfalls up to $700-million over the first three years of the deal. Airbus also obtains warrants for 100 million subordinate voting shares in C Series parent Bombardier Inc. and the right to buy Bombardier's stake in the partnership at a later date.

No cash is changing hands in the deal and the C Series partnership assumes no debt as part of the transaction, the partners said. All of Bombardier's current C Series final assembly in Mirabel, Que., will remain and Airbus has pledged to set up additional factory space for the C Series at an existing Airbus facility in Mobile, Ala.

The partnership should more than double the value of the C Series program and ensure the airliner realizes its full potential, Mr. Bellemare said. There were customers wanting to place C Series orders who remained unsure about the plane's viability in the long term, Mr. Enders said. That uncertainty has now been lifted, he said.

The plane had garnered 360 firm orders as of the end of 2016, but no significant new orders in more than a year.

The decision by Boeing to attack Bombardier through a trade war has now backfired on the U.S. giant as a result of the deal between the Canadian plane maker and Airbus, said Jerry Dias, president of Unifor, which represents workers who make Bombardier's Q400 turboprop plane in Toronto. The combination of Airbus and Bombardier creates a "bigger monster" for Boeing to face, he said.

Chad Bown, a former Obama administration and World Bank economic official, said the deal appears to allow assembly to be moved to Alabama, something that would give Bombardier and Airbus the ability to "tariff-jump" if necessary in the event the U.S. International Trade Commission upholds the preliminary Commerce decisions and penalizes the C Series.

"Even if the Trump administration imposed final anti-dumping and countervailing duties on imports of the C Series, those jets that would be 'built' in Alabama would presumably not be hit with the tariffs," Mr. Bown, now a senior fellow at the Peterson Institute for International Economics in Washington, wrote in an e-mail.

Bombardier's founding family made some courageous moves to get the C Series to market and another by doing this deal with Airbus, said Karl Moore, a management specialist at McGill University. "I guess their view is they'd rather have this as part of their heritage and own a chunk of it than own 100 per cent of something that isn't flying."

It will also raise questions in Quebec's national assembly and the House of Commons about what exactly Quebec got for its $1-billion investment in the C Series and whether Airbus's ownership of Bombardier's premier aircraft program is the best answer for Canada. The airliner is the first all-new single-aisle aircraft to come to market worldwide in nearly 30 years.

"On the surface, Bombardier's new proposed partnership with Airbus on this aircraft would help position the C Series for success by combining excellence in innovation with increased market access and an unrivalled global sales force," said Navdeep Bains, federal Minister of Innovation, Science and Economic Development.

"Bombardier's management, under Alain Bellemare's leadership, has made a very good business decision to address the challenges the company has been facing," said the Caisse de dépôt. "This agreement with Airbus strengthens the company, improves its prospects for growth, and makes the company more robust over the long term."

With reports from Greg Keenan and Adrian Morrow

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