The European aircraft manufacturer buys out Bombardier’s stake in its A220 program, upping its shares to 75%, with the government of Québec holding the remaining 25%. The move was prompted by Bombardier’s loss-making European railway business which has plunged the Canadian company deep into the red and in need of fresh funds. Airbus will be able to fully acquire the A220 by 2026 at the latest, taking over Québec’s shares of 25%.
“We are […] proud of the responsible way in which we have exited commercial aerospace, preserving jobs and reinforcing the aerospace cluster in Québec and Canada. We are confident that the
A220 program will enjoy a long and successful run under Airbus’ and the Government of Québec’s stewardship,” Alain Bellemare, President and CEO Bombardier, Inc. stated after the Airbus deal
Words applauded loudly by each politician, manager and honorable guest attending the sales event.
What Mr. Bellemare presumably thought while speaking to the attendees, but did not say: “It is a pity that financial reasons have forced us to lay the fate of the most valuable pearl of the Canadian aerospace industry into the hands of others, giving up control of the A320 program.”
Delays in development and the continuously increasing costs of Bombardier’s former CSeries caused the Canadian aircraft manufacturer’s financial troubles. In October 2017, Airbus acquired 50.01% of the series and began marketing the CS100 as A220-100.
Additional jobs expected
The new ownership structure inked now and effective immediately will preserve existing and create additional jobs at the production site of the A320 at Montreal airport Mirabel. This, because Airbus intends to significantly up the production rate of the A220.
Here are the bullet points of the new deal:
- Bombardier work packages for the A220 and A330 production capabilities from the Canadian company’s site in Saint-Laurent, Québec, will be transferred to Airbus through its subsidiary Stelia Aerospace, securing 360 jobs in Québec.
- The Québec-based enterprise will receive US$591M, net of adjustments, of which US$531M was received at closing, and is released of its future funding capital requirement to Airbus Canada.
- Over 3,300 Airbus jobs will be secured in Québec and more are expected to follow as suppliers are considering the transfer of A220 workloads to Québec now that the Bombardier-Airbus has been concluded, securing the future production of Airbus aircraft in Canada.
Currently, on average three A220s are built each month. However, in order to earn money with the 110 to 130-seater, Airbus needs to significantly increase the production rate.
From a capacity point of view, this could be easily done at both main North American Airbus plants in Mirabel, Québec, and Mobile, Alabama. In case of a close work-sharing model, up to 14 A220s per month could be assembled and delivered to customers.
This aspect becomes even more pressing since Green Africa Airways, a Lagos, Nigeria-based airline, has signed a Memorandum of Understanding (MoU) for 50 A220-300 aircraft. It is one of the major global orders for the A220 program, and the largest ever from the African continent. It adds to the firm order of 658 units that stood in the books at the end of last January.
Larger A220 variant on the drawing boards
Last Friday, the Trump administration announced a tariff hike from 10% to 15% on aircraft manufactured in the EU and ordered by U.S. airlines, effective March 18th. The decision deepens the long-lasting transatlantic rift between both sides over subsidies for aircraft programs. However, Washington's one-sided move will not affect the Canada-built A220 series. Instead, it will torpedo the growth plans of those U.S. carriers that have ordered new aircraft from both big manufacturers, and which are already badly hit by Boeing's B737 MAX disaster, leading to a shortage of jetliners.
In the meantime, Airbus officials have indicated plans to expand the A220 series by building a larger A220-500 variant, competing directly with Boeing's problem child B737 MAX.
In his speech held at the sales event, AB CEO Guillaume Faury ensured his company's "ongoing commitment to this fantastic aircraft program, and we are aligned with the Government of Québec in our ambition to bring long-term visibility to the Québec and Canadian aerospace industry."
Cargo-friendly pax aircraft
Although plans for building A220 freighter versions for e-commerce distribution do not seem to be part of the production plans, the passenger versions are nonetheless interesting for operators from a cargo point of view.
According to Annabelle Duchesne, Senior Advisor, A220 Media Relations & Product Communication Airbus Canada, the A220-100 and its larger sister model A220-300, although both being primarily designed to accommodate air travelers, have generous cargo holds enabling 3.7 tons (A220-100) and even up to 5 tons (A220-300) of freight per flight, depending on the weight of pax luggage. Hence, air freight becomes a possible additional source of revenue for A220 operators.
A330-800 obtains Type Certification
Simultaneously to the deal inked with Bombardier, Airbus obtained joint Type Certification from the European Aviation Safety Agency (EASA) and the Federal Aviation Administration (FAA) for their A330-800 variant. The aircraft’s certification flight-test campaign was successfully performed by aircraft MSN1888, which completed the program in 370 flight test hours and 132 flights since it first took off in November 2018.
The train division could be sold next
Finally, a word about Bombardier. Fact is, that the company’s financial situation has eased somewhat following the sale of its aircraft division to Airbus and the Province of Québec. But its economic situation remains strained.
That is why it is currently negotiating with the French railway company, Alstom, to sell its European train business. Negotiations are at an advanced stage. However, market observers speak of an attempted emergency sale.
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