Published: Thu, October 19, 2017
Global News | By Stacy Ballard

Airbus steps into the Bombardier-Boeing dispute

Airbus steps into the Bombardier-Boeing dispute

With the United States Government focused on bringing jobs back to its manufacturing industry, the partnership may also be a win for the U.S.

In terms of the investment agreement, Airbus will acquire a 50.01% stake in CSALP, the firm responsible for the C Series programme and which is now owned by Bombardier and Investissement Québec (IQ) with 62% and 38% stakes respectively.

Boeing said in a statement that Airbus and Bombardier appear to be seeking to circumvent the US findings and labelled the deal "questionable".

The deal will give Airbus a 50.01 percent interest in CSeries Aircraft Limited Partnership (CSALP).

The deal included no up-front cash payment, a possible reflection of the plane's enormous production costs.

"The arrival of Airbus as a strategic partner today will ensure the sustainability and growth of the C Series program, as well as consolidating the entire Québec aerospace cluster", said Dominique Anglade, Quebec's deputy prime minster of economy, science and innovation.

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The combination significantly complicates what had been a three-way trade dispute between the United States, Canada and Britain.

Currently, Airbus' smallest aircraft is the A320 family.

Delta Air Lines past year announced an order for 75 C Series planes - with a sticker price $5.6 billion, although airlines routinely get big discounts - and an option for 50 more. Boeing won a preliminary victory against Bombardier last month when President Donald Trump's administration imposed import duties of 300 per cent on the C Series.

The deal also provides Airbus warrants exercisable to acquire up to 100m Class B Shares of Bombardier, the companies said.

"We've been extremely fast compared to other programs at Airbus", Airbus chief executive Tom Enders said.

Airbus - in a long-running trade battle with Boeing Co. - argues that the US company receives illegal tax breaks that act like subsidies and hurt competition. 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.

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"Our position remains that everyone should play by the same rules for free and fair trade to work", spokesman Dan Curran said in a statement.

Bombardier will own 31 per cent and the Quebec government's investment agency will hold 19 per cent, down from 49.5 per cent when it invested US$1 billion in the program. Still, they recognized the added benefit of potentially avoiding the import duty.

The deal is the latest volley in a major trade dispute, as Airbus plans to build some of the 6,000 planes projected over the next 20 years at its new assembly line in Mobile, Ala. Bombardier said the partnership should more than double the value of the CSeries programme. "You can't just fly an airplane to Alabama and say it's made in America". The company has factories in countries such as France, Germany, Spain, China, and the US, where Airbus operates a factory for its A320 family aircraft in Mobile, Ala.

That could give the C-series another ally in Congress, where the tariff already faces resistance.

Richard Aboulafia, a USA -based analyst at Teal Group, said the decision not to invest in the CSeries made China look "much less serious" about developing its aerospace sector.

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