Airbus to take majority stake in Bombardier C-Series jet programme
The deal, which would come at no cost for Airbus, would give the European planemaker a 50.01 percent interest in CSeries Aircraft Limited Partnership (CSALP), which manufactures and sells the jets, the companies said.
Airbus Chief Executive Tom Enders said the company has offered to assemble some of the narrowbody jets at its U.S. plant in Alabama for orders by American carriers. The U.S. assembly line would mean the 110 to 130 seat jets would not be subject to possible U.S. anti-subsidy and anti-dumping duties of 300 percent, Bombardier Chief Executive Alain Bellemare said at a press conference.
"There is a ton of strategic value in doing this deal," Bellemare said.
Talks for the deal first started in August. Enders said the deal is different from an earlier round of talks in 2015, when Airbus abruptly ended negotiations, Reuters reported then. He said the plane is performing better.
"It`s an entirely different situation," he said.
Under the deal, Bombardier will own about 31 percent, while Investissement Québec, the investment arm of the province of Quebec, will hold 19 percent once the deal closes.
Separately, Quebec`s largest pension fund, which holds a 30 percent stake in Bombardier`s rail division, said the decision "strengthens the company, improves its prospects for growth, and makes the company more robust over the long term, which is important to shareholders.”
The deal also provides Airbus warrants exercisable to acquire up to 100 million Class B Shares of Bombardier, the companies said.
The deal comes amid a trade dispute with U.S. rival Boeing Co over the C-Series jet. The U.S. government has slapped steep preliminary anti-subsidy duties on sales of the C-Series jets over that dispute.
A Boeing spokesman were not immediately available for comment.
Airbus will provide procurement, sales and marketing, and customer support expertise to CSALP, the companies said.
There will be no cash contribution by any of the partners, nor will CSALP assume any financial debt, they said.
Bombardier expects a $400 million loss in commercial aircraft this year, but has set a breakeven target for 2020.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.