Bombardier may have just saved the life of its C Series passenger jet program, but the dream of a new all-Canadian major commercial jet maker has died.
The sale of a majority interest in Bombardier Inc.'s C Series partnership to Airbus Group SE shows that, even after hundreds of millions of dollars in support from taxpayers, it will take the financial and marketing muscle of Europe's plane-making giant to do battle against both Boeing Co. and Donald Trump's Washington.
The companies announced the deal late Monday, and it came after recent reports that Bombardier, the plane and train maker, was seeking buyers for other assets, namely its regional jet and Q400 turboprop segments that have generated cash as the C Series program stumbled along.
It's not the first time the two had broached the idea of teaming up. Bombardier had tried to woo Airbus into the program in 2015, but the talks came to nothing. After they ended, an executive with the world's largest plane maker criticized Bombardier's 100-to-150-seat, single-aisle aircraft as an "orphan" threatened by new offerings from the major manufacturers. Now, Airbus says it's a terrific fit with its own jets in that segment.
There's no question it's a sweet deal for Airbus, as rescuer. It gets 50.01 per cent of the partnership behind the C Series, and has agreed to take on procurement, sales and marketing of the aircraft that is now the target of a nasty trade dispute in the United States, triggered by Chicago-based Boeing. Bombardier will have 30 per cent and Quebec will have 19 per cent.
Neither gets any cash in exchange for their interests, and Bombardier agreed to fund shortfalls to a maximum of $700-million (U.S.) over the first three years after the deal closes. That essentially puts a badly needed limit on the cash the company has been burning through. Airbus will also end up with as much as 5 per cent of Bombardier's class A and B shares.
The C Series has been in equal measures the centrepiece of Bombardier's future in aerospace and its biggest millstone, a mainline aircraft coming to market years late and $2-billion (Canadian) over budget. When it looked like the turbulence was subsiding after nearly a decade of hurdles, the plane was slapped with crippling duties in the United States, where Boeing complained it was massively subsidized by Quebec, Canadian and British taxpayers.
Boeing demanded an 80-per-cent duty. It got more than its wish from the U.S. Department of Commerce, winning tariffs of almost 300 per cent, eliciting shock among political leaders in Canada and in Britain.
Delta Air Lines had said it planned to proceed with its own 75-plane order, and had no intention to pay the tariffs, but suggested the deliveries could be delayed, raising more uncertainty for Bombardier.
The deal with Airbus takes aim at two big problems for Bombardier – taking on Boeing and manoeuvring in a U.S. market where "America first" is the rallying cry. The main assembly operations will remain in Quebec and facilities for final assembly will also be in Canada. But Airbus plans to operate an additional final assembly line in Mobile, Ala., to serve U.S. customers, it said.
Pledging job creation in the United States will surely bolster its case as North American free-trade agreement talks are hitting numerous sticking points and with the U.S. International Trade Commission expected to make a final ruling on the tariffs early next year.
Bombardier was running out of options as it faced attacks on its marquee aerospace offering, and business opportunities for the C Series appear to have widened in a big way with the program coming under the wing of Airbus.
It will come as a disappointment to Canadians, however, that a home-grown company that they helped support needed a European backer to turn the jet into a competitive threat.