Airbus Bombardier deal gives it a win over Boeing
European maker will start Series C jetliner assembly in Alabama.
Airbus agreed to acquire a majority stake in Bombardier Inc.’s C Series program and will start assembling the jetliner in the United States, vaulting a technologically advanced but slow-selling plane onto the front lines of the battle with Boeing over global aircraft sales.
Without putting up a dime at closing, Airbus will take just over half of a partnership controlling the C Series. The European planemaker’s marketing muscle and production expertise boosts the viability of the all-new aircraft after more than $6 billion in development costs forced Bombardier to rely on government assistance.
The deal also thrusts Airbus into the middle of a bitter trade spat between the Canadian manufacturer and Boeing. Following a Boeing complaint that Bombardier sold 75 of its C Series jets to Delta Air Lines for “absurdly low prices,” the Trump administration slapped the aircraft with import duties of 300 percent in recent weeks — roiling U.S. relations with Canada and the United Kingdom, where Bombardier makes the plane’s wings.
In a potential effort to circumvent the tariffs, Airbus will add another final assembly line for the C Series at its factory in Mobile, Ala. The facility will serve U.S. customers and complement production in Canada, according to a company statement late Monday.
“This is a program that has been waiting for a deus ex machina, and wow, it really got one,” Richard Aboulafia, an aerospace analyst at Teal Group, said in an interview. The deal casts Airbus as a global player while Boeing comes off as “a bit shortsighted and protectionist. It makes Boeing look like they’ve been playing ticktack-toe against a chess master.”
“The main risk would appear to be only that Airbus gets distracted,” Sandy Morris, a London-based analyst with Jefferies, said in a note.
Boeing fell less than 1 percent to $257.50 after the close of regular trading in New York. The company’s 67 percent advance this year through Monday leads the Dow Jones Industrial Average. Bombardier has climbed 9.7 percent this year. Bloomberg reported Sunday that the Canadian manufacturer is exploring options for its aerospace assets.
It’s too soon to say if the new Alabama production line would enable the C Series to avoid U.S. tariffs. The duties were applied to C Series planes “regardless of whether they enter the United States fully or partially assembled,” according to a U.S. government fact sheet on the matter. Boeing said Airbus and Bombardier were just trying to get around the restrictions.
“This looks like a questionable deal between two heavily state-subsidized competitors to skirt the recent findings of the U.S. government,” Boeing said in an emailed statement. “Our position remains that everyone should play by the same rules for free and fair trade to work.”
Discussions with Bombardier started in August, said Airbus Chief Executive Officer Tom Enders. The Canadian company had also been in touch with a small group of Chinese state-owned enterprises about a C Series stake.