Airbus likely to buy Bombardier’s stake in A220 jets: sources ALLISON LAMPERT and TIM HEPHERS
MONTREAL/PARIS Europe’s Airbus SE is likely to acquire Canadian plane and train maker Bombardier Inc’s remaining stake in the A220 passenger jet program, two industry sources said on Friday.
A deal for Airbus to buy the 33.58 per cent share in the program was widely expected after Bombardier said in January it was reviewing the stake in the joint venture. Barring surprises, a deal is expected next week ahead of both companies’ earnings on Feb. 13, the sources added.
Airbus and Bombardier both declined to comment. The terms were not clear of a potential deal that would mark Bombardier’s exit from commercial aviation. The Canadian company had a cash crunch in 2015 due to its high-stakes bet on the technologically advanced jet.
Bombardier shares rose 4.8 per cent to close at $8.75 in Toronto trade.
Montreal-based Bombardier ceded control of the narrowbody program to Airbus in 2018 for a token Canadian dollar as part of broader efforts to improve its finances, and retained a minority stake alongside the province of Quebec.
Bombardier said it would review the stake in the program, which will require additional cash to ramp up production, as it faces higher-than-expected costs in its rail division and more than US$9 billion of debt.
Bombardier had said the venture needs more investment and might be subject to a writedown when it announces results.
Final stages of negotiations are likely to be tough, one of the people said. While the A220 has seen a sharp pickup in sales since Airbus took over the program, it has not so far seen the improvement in costs that had been expected as a result of Airbus applying its greater purchasing power with suppliers.
Airbus holds a 50.6-per-cent stake in the program.
Airbus is targeting a double-digit percentage reduction in production costs.