LONDON – Airbus, Bombardier, and Investissement Quebec have gained all of the regulatory approvals and signed the required agreements to close the CSeries transaction, expected to happen on July 1, 2018.
Airbus will now formally acquire a majority stake in the Bombardier CSeries Aircraft Limited Partnership (CSALP) that was announced back in October 2017.
With this approval and imminent acquisition, Airbus will solidify its position in the 100-150 seat market, also giving Bombardier all the tools to extend the global reach it needs.
All operations, including the program’s head office, final assembly line, and related functions will remain in Mirabel, Quebec.
The current funding structure of the CSALP will remain the same with Bombardier funding up to $225 million in cash shortfalls this year, with it increasing to $350 million during 2019.
Airbus will consolidate this funding structure from July 1, 2018.
• All regulatory approvals required for the closing of the Airbus + CSeries transaction have been obtained
• Second Final Assembly Line in Alabama, for U.S. airline customers (hence no import tax)
— Alex Macheras (@AlexInAir) June 8, 2018
On top of this, Airbus will continue to ramp up the production of CSeries aircraft with the aim of delivering 34 aircraft this year, compared to the 17 Bombardier delivered in 2017.
There is also an expected increase in demand for this segment of aircraft, so a second final assembly line for the CSeries program will open in Mobile, Alabama.
The Alabama assembly line will produce planes for all the U.S.-based customers, such as Delta Air Lines, which will become the world’s largest operator of the type.
The facility in Mobile will also exempt the CSeries program from any tariffs on parts in the U.S.
In the 100-150 seat market, there is demand for up to 6,000 aircraft over the next 20 years. The CSeries program is aiming to capture a significant percentage of that market.
“The strength of the entire Airbus organization will be behind the CSeries,” said Airbus Chief Executive Officer Tom Enders.
“Not only will that enable this outstanding aircraft to fulfill its market potential, but we are convinced the addition of the C Series to our overall aircraft product offering brings significant value to Airbus, our customers, and shareholders,” he added.
From Bombardier’s side, its CEO, Alain Bellemare, says that the green light to move forward with Airbus marks the beginning of a “very exciting new chapter for the CSeries and the Canadian Aerospace industry,”
“This partnership will ensure the CSeries’ commercial success,” he said.
According to Bellemare, the CSeries program will grow thanks to the “unmatched global scale, strong customer relationships and operational expertise.”
With Airbus looking to ramp up the CSeries production line, the likelihood of future sales announcements at the upcoming Farnborough Air Show is quite high.
Scheduled to begin on July 16, the Farnborough Air Show will give Airbus and Bombardier the opportunity to work together and announce new deals.
Just recently, airBaltic announced the firm purchase agreement for 30 CSeries CS300 planes with Latvian Low-Cost Carrier, airBaltic.
The purchase order features 30 firm and 30 options, totaling 60 CS300 jets, valued at $5.9 billion if all rights are exercised.
READ MORE: airBaltic Orders 60 Bombardier CSeries CS300
airBaltic will become the world’s first all-CSeries operator, once its Boeing 737s and Q400s are retired from the fleet.
“This significant reorder from our CS300 launch operator is a strong testimony to the aircraft’s exceptional in-service performance,” said Fred Cromer, President, Bombardier Commercial Aircraft at the time of the announcement.
This order puts Bombardier in the prime position of having 80 CS300s on order for the European carrier, giving it more confidence to ink more sales at the upcoming trade show in July.
A win-win partnership?
“Above all, we are ensuring the growth of the C Series and securing the more than 2,000 jobs attached to it in Mirabel,” noted Québec’s Deputy Premier, Minister of Economy, Science, and Innovation and Minister responsible for the Digital Strategy Dominique Anglade.
“This partnership positions Montréal as Airbus’ largest research and development center outside Europe, representing tremendous opportunities for our entire aerospace industry,” he added.
Altogether, the CSeries program might be a strong addition to the Airbus portfolio. And with Boeing failing to ink a deal with Embraer, the 100-250 seat market might tilt in favor of the European manufacturer for the next years to come.