Bombardier Aerospace (BBA, Montréal Trudeau) has announced it will partner Airbus (AIB, Toulouse Blagnac) on its C Series aircraft programme with a corresponding agreement having been signed on Monday, October 16.
In a joint-statement, Bombardier and Airbus said the tie-up would bring together Airbus’ global reach and scale with Bombardier’s newest jet aircraft family, positioning both airframers to fully unlock the value of the C Series platform and create significant new value for customers, suppliers, employees and shareholders.
In terms of the investment agreement, Airbus will acquire a 50.01% stake in C Series Aircraft (CSALP), the firm responsible for the C Series programme and which is currently owned by Bombardier and Investissement Québec (IQ) with 62% and 38% stakes respectively. Once the deal has gone through, Bombardier and IQ's shareholdings will be halved to approximately 31% and 19% respectively. In addition, CSALP's reconstituted board will initially consist of seven directors, four of whom will be proposed by Airbus, two of whom will be proposed by Bombardier, and one of whom will be proposed by IQ. Airbus will be entitled to name the Chairman of CSALP.
Airbus will also enter into commercial agreements relating to (i) sales and marketing support services for the C Series, (ii) management of procurement, which will include leading negotiations to improve CSALP level supplier agreements, and (iii) customer support. On the transaction's closing, expected for the second half of 2018, there will be no cash contribution by any of the partners, nor will CSALP assume any financial debt. Bombardier will continue with its current funding plan of CSALP and will fund, if required, the cash shortfalls of CSALP during the first year up to a maximum amount of USD350 million.
CSALP’s headquarters and primary assembly line and related functions will remain in Québec. However, the C Series's Final Assembly Line in Canada will be backed up by additional C Series production at Airbus’ manufacturing site in Alabama. A US production facility is also expected to allow Bombardier to avoid the 200%+ heavy tariffs the US Department of Commerce has proposed levying on the C Series - its Delta Air Lines (DL, Atlanta Hartsfield Jackson) order for seventy-five CS-100s in particular.
"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)," Airbus said. "The world-class sales, marketing and support networks that Airbus brings into the venture are expected to strengthen and accelerate the C Series’ commercial momentum. Additionally, Airbus’ supply chain expertise is expected to generate significant C Series production cost savings."
As of June 30, 2017, Bombardier's order register indicates the C Series has a total backlog of 360 aircraft including 123 A220-100s (of which eight have been delivered to Swiss) and 237 A220-300s (of which four have been delivered to Swiss and seven to airBaltic).
