It's hard to decide which recent revelation to emerge from the twisted C Series saga is more disturbing. Is it that Bombardier was desperate and deluded enough to think it could sell technology paid for by the Canadian taxpayer to Chinese interests, or that Ottawa intervened so directly to engineer a deal between Bombardier and one of its much bigger Western rivals?
Reports that Bombardier was in talks to sell a stake in the C Series to a Chinese company – most likely state-owned Commercial Aircraft Corporation of China, or Comac – defy logic given that most Western countries still take a dim view of transferring technology developed within their borders to entities controlled by the Chinese government. Ottawa would surely have vetoed any C Series tie-up with the Chinese out of national security concerns and the terrible political optics in giving the Chinese such easy access to intellectual property developed in Canada.
While a tie-up with a Chinese entity might have helped Bombardier generate orders in China, it might have also have effectively shut the C Series out of the U.S. and European aircraft markets. China wants to become a global aerospace force and Comac has been developing planes to compete with Boeing and Airbus.
But neither the U.S. government nor the European Union would want to help it reach that goal by opening their markets to a Comac-controlled C Series.
Hence, that Ottawa would move to discourage Bombardier from pursuing talks with a Chinese partner is not surprising. What is surprising is that the federal government would so actively try to play matchmaker between Bombardier and Airbus, especially after its earlier failed attempt to engineer a C Series deal on nearly identical terms between Bombardier and Boeing.
Since when is it the job of the Canadian ambassador in Washington to play private deal maker? To be sure, Boeing's trade complaint against the C Series called for drastic action to save the aircraft program from near-certain death in the face of order-killing antidumping and countervailing duties. But Ambassador David MacNaughton's attempt to play midwife to a deal between Boeing and Bombardier, undoubtedly on orders from his bosses in Ottawa, suggests a level of dirigisme that would would impress even French bureaucrats, masters of state meddling in business.
It should have been clear to Ottawa that, once Boeing launched its trade case, there was no turning back for the U.S. aerospace giant. It had by then already concluded that it stood to gain much more by killing the C Series than by owning a piece of it. Boeing's only mistake was assuming that Airbus, which had kicked the C Series tires in 2015, had come to the same conclusion.
And it had, until Bombardier came calling again in August, this time at Ottawa's urging. In the end, Bombardier handed over control of the C Series for nothing, throwing in an option to buy the other 49.9 per cent of the C Series in 2025 and warrants to buy Bombardier shares that are now worth more than $50-million, based on the increase in Bombardier's stock price since the Oct. 17 deal.
But how much incentive Airbus has to push C Series sales – particularly those of the 150-seat CS300 – over its own A320neo aircraft remains uncertain.
Airbus sales chief John Leahy, who is retiring by year-end, told Leeham News and Comment that Bombardier and Airbus "are blatantly not going to be discussing product strategy or working on deals together until the deal closes."
Besides, Airbus chief Tom Enders has much bigger problems to worry about than the C Series, specifically the investigation Britain's Serious Fraud Office and its French counterpart, le Parquet national financier, have opened into potential illegal commissions. According to the French business newspaper Les Échos, this has already led Mr. Enders to initiate an internal corruption investigation and begin dismantling the Service & Marketing Organization at the heart of the charges.
So the Airbus sales team that Bombardier bragged will soon be helping it rack up C Series orders has its own mess to clean up, which may explain why Airbus has fallen so far behind Boeing in generating new orders so far in 2017.
Since Ottawa's hands are all over the Airbus-C Series deal, it now owns it.
If the transaction lives up to the spin Bombardier chief Alain Bellemare and Mr. Enders have put on it, then the C Series may indeed have a bright future and Prime Minister Justin Trudeau's government will be able to claim credit for saving Canada's aerospace bacon. If it doesn't, blame Ottawa.