The Airbus A220 is more complex than most commercial aircraft programs in terms of ownership. This is due to its interesting history and its roots at Bombardier – where the Canadian manufacturer has a minority stake in the A220. However, things might get a little simpler as industry sources told CNBC on Friday that Airbus is poised to acquire Bombardier’s remaining stake in the program.
According to CNBC, industry sources see Airbus taking the remaining stake in the A220 program currently owned by Bombardier. In fact, these sources report a deal is expected next week, in advance of the February 13 release of their earnings reports.
Canadian manufacturer Bombardier hasn’t been doing too well lately. Involved in aerospace as well as light-rail transportation, it has been undergoing a significant restructuring of its assets. In fact, Bombardier sold off its CRJ – its regional jet program – to Mitsubishi Heavy Industries last year. There is even talk that it might also exit the private aircraft world by selling its business jet division, which includes the Learjet, Challenger, and Global models.
Bombardier had invested a lot in the A220, which was known initially as the CSeries. The company saw initial success with a huge order from Delta. Unfortunately, it attracted the attention of Boeing – which petitioned the U.S. Government to take action, accusing Bombardier of illegal ‘dumping’, selling the aircraft below cost. Facing the possibility of 292% tariffs on its major sale to Delta, the entire program was in jeopardy.
It was in 2018 that Montreal-based Bombardier ceded control of the program to Airbus. With a majority 50.6% stake for Airbus, Bombardier retained a minority stake in the program in cooperation with the Canadian province of Quebec.
More funds needed for A220 production
Since Airbus has taken over the program, the A220 has seen a fair deal of success. In fact, it has logged 658 orders for the airframe as of 31 January. However, despite this success, more cash is needed in order to ramp up production – something that Bombardier may not be able to afford. In fact, the company faces higher-than-expected costs in its rail division. It also faces more than US$9 billion of debt.
Despite Bombardier’s significant presence in Quebec, the province’s Premier, Francois Legault is ruling out further investment in the joint venture. Economy Minister Pierre Fitzgibbon said last Monday “We put $1 billion in it and that’s enough.”
When we asked Airbus for comment with regard to the Quebec government’s lack of interest in injecting more funds, this is what they had to say:
“Airbus is fully committed to the success of the A220, to Quebec and Canadian aerospace and will continue to fund the programme on its way to breakeven…The partnership (Airbus Canada Limited Partnership) is working hard to make a huge success of the A220 (-100 & -300), to sell the aircraft, ramp-up production and reduce costs to make the A220 a commercial and economic success.”
Buying out Bombardier’s share of the program might not be something Airbus wants to do at this time. However, with a lack of interest from other stakeholders, there aren’t many options.
With its current 50.6% stake in the program, Airbus delivered 48 A220 jets in 2019. Furthermore, it is ramping up production toward a maximum monthly capacity of 10 jets at Bombardier’s Mirabel, Quebec facility. By around 2025, it will produce four planes per month at a second line in Alabama.
This would be a sad move for many Canadians, who had high hopes for Bombardier’s aerospace program and the A220. On that same note, many believe the company as a whole to be poorly managed and in dire need of an overhaul. Giving up the remaining share of the A220 to Airbus may assist in Bombardier getting back on track with its finances.
If the rumors are true, do you agree with Bombardier’s decision to let go of the program? Or is it losing out on a golden opportunity? Let us know what you think by leaving a comment!
We reached out to both Airbus and Bombardier in search for an official statement. However, at the time of publishing this article, no responses have been received. We will update this article if anything new comes in.