Time is Money, Time is Business

Even if it is the middle of the night.

In the middle of the night, Airbus agreed to acquire a majority stake in Bombardier C Series Aircraft Limited Partnership.

Airbus is a European multinational corporation that designs, manufactures, and sells civil and military aeronautical products worldwide from planes, helicopters to combat air vehicles. They are the sole biggest competitor to the American plane maker Boeing.

The iconic Boeing B747 (B744 in this image), most airlines are phasing this aircraft out. British Airways is the largest operator of this type and variant of aircraft.

The iconic Boeing B747 (B744 in this image), most airlines are phasing this aircraft out. British Airways is the largest operator of this type and variant of aircraft.

While Bombardier is a multinational aerospace and transportation company based in Montreal, Quebec, Canada. Starting as a maker of snow machines or snowmobiles, over the years it has grown into a large manufacturer of single isle airliners, business jets, mass transportation vehicles and recreational equipment.

New Crossrail Trains (Class 345) built by Bombardier. By Sunil060902 (Own work) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

New Crossrail Trains (Class 345) built by Bombardier.

By Sunil060902 (Own work) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

This agreement calls for Airbus to acquire a 50.01% interest in the C Series Aircraft Limited Partnership, a joint venture formed between Bombardier and province-owned Investissement Québec, Airbus says. The remaining ownerships will be split between a 31% stake for Bombardier and a 19% interest by Investissement Québec.

The partnership brings together two product lines, with 100-250 seat market segment expected to represent more than 6,000 aircrafts over the two decades. With the combination of Airbus’ global reach and supply chain expertise and Bombardier’s newest aircraft family (CS100-300) to create significant value for customers, suppliers, employees and shareholders. In addition, thanks to Airbus’s supply expertise, the production line is expected to save significant amounts. Furthermore, due to the growing market for the C Series, a second Final Assembly Line in Mobile, Alabama will be built to serve US customers – Delta.

So who does this actually benefit?

This deal is good news for Bombardier who has recently been under huge pressure from the American government and Boeing who claims that they have received improper subsides, and hence they are consider 300% tariff on the aircraft. Both Bombardier, the Canadian government denies this; Delta airline is also in support as they have a firm order for 75 CS100 aircrafts. So good news for the Canadian manufacturer and the American airline – Delta.

Airbus A380 – can seat up to 800 passengers, but typically 550-650 in 3 or 2 class configurations.

Airbus A380 – can seat up to 800 passengers, but typically 550-650 in 3 or 2 class configurations.

It is also good news for Airbus as it’s expands it range of aircrafts from 100 seater planes to 600 seater planes. While in the past Airbus has had aircrafts in the low capacity single-aisle market but without much success. Only 80 A318 from the A320 family have ever been built with the capacity of around 130 passengers. In addition to this the A319, a slightly larger variant of the A318 and smaller than the flagship airliner of the family the A320 has seen no orders since 2012, hence both these aircrafts are practically dead. “This is a win-win for everybody,” says Airbus chief executive officer Tom Enders. In addition to securing CSeries-related jobs in Canada, the UK and China, he says, “we also bring new jobs to the US. [And] Airbus will benefit from strengthening its product portfolio in the high-volume single-aisle market, offering superior value to our airline customers worldwide."

Bombardier CS300 aircraft in Swiss livery.

Bombardier CS300 aircraft in Swiss livery.

With this deal Airbus can further grow in the narrow –body market and have a solid foothold in the smaller jet market while Boeing only has the B737 Max 7 – more of an A320neo competitor. Hmmm… Embraer?  ….. Boeing?

Boeing released a statement earlier stating that ‘this looks like a questionable deal between two heavily state-subsidised competitors to skirt the US government findings. Everyone should play by the same rules for free and fair trade’.  In an outsider’s perspective it actually looks like two of Boeing’s competitors came up with a creative solution to attempt to block a superior product in the 100 seat market. Another thing which Boeing is forgetting it that it too receives state subsidies along with its competitor Airbus in order to develop new aircrafts. Without it they wouldn’t be able to go ahead with the B777x program. The fight between these two companies and the US and EU government is a fierce, never-ending battle; but the truth is that both need subsidise to take-off. The only question is, do both companies pay back their ‘loans’….?

 

You may also be interested to watch this short clip by Airbus YouTube on this topic: https://www.youtube.com/watch?v=Va6UH-icqSU