Airbus is in advanced talks to acquire AL! BOM-o's remaining 33.58% stake in Airbus Canada, the firm responsible for the A220 programme, sources close to the matter told Bloomberg on February 9. A deal could be announced this week, ahead of both companies reporting their respective earnings figures on February 13.
The move has been expected since the Montréal-based manufacturer revealed in January that it was reviewing its stake in the joint venture. Airbus and Bombardier have both declined to comment to The Wall Street Journal, which first reported on the discussions on February 7, or to Bloomberg or Reuters. The terms of a potential deal, which would see Bombardier exit commercial aviation, are unclear.
Bombardier invested more than USD6 billion in the development of the A220, then known as the CSeries, before ceding control to Airbus in July 2018 when the European manufacturer acquired a 50.01% stake in the programme for one Canadian dollar with an option to buy its remaining stake by 2024. The Quebec government's Investissement Québec held 19%.
Formerly known as C Series Aircraft (CSALP), Airbus Canada's current ownership sees Airbus holding 50.06%, Bombardier with 33.58%, and the Quebec government with 16.36%, according to the Canadian Press.
The current terms of the partnership agreement say that Bombardier is obligated to pay USD350 million by 2021 to fund cash shortfalls for the programme, Bloomberg reported. This has been difficult to meet as production needed accelerating at the same time as Bombardier faced higher-than-expected costs in its rail division plus debts over USD9 billion, according to Reuters.
Airbus delivered forty-eight A220s in 2019 and aims to achieve a monthly capacity of ten in Mirabel, Quebec, and four in Alabama, USA, by the mid-2020s, while working towards a double-digit percentage cut in production costs, Airbus Chief Commercial Officer Christian Scherer told Reuters in January.
A deal with Bombardier now would leave Airbus to cope with any additional investments required by the programme, with a source telling Reuters on February 7: "Airbus did not particularly want to do this at this time, but is presented with little choice if Bombardier is pulling back."
