Today, February 13th, the Canadian aerospace giant Bombardier completed its strategic withdrawal from the commercial aviation manufacturing industry. It was announced today that they would transfer all their shares in the partnership of the Airbus A220 program to both Airbus and the government of Quebec. In addition to manufacturing the A220 at their main facility in Mirabel, Québec, Airbus is in the final stages finishing a final assembly line for the A220 program in Mobile, Alabama, where they also construct the A320 family of airplanes.
The new ownership structure of Airbus Canada, which is the division of Airbus responsible for running the A220 program, will be 75% owned by Airbus and 25% owned by the government of Québec. Airbus also has the option of redeeming the shares of the program owned by the government of Quebec by the year 2026. While the government of Québec will not be giving any more subsidies or cash for the increased ownership stake in the partnership, they will instead be getting more of an ownership state. This will reflect the investment that they made when the plane was still completely owned by Bombardier and called the C Series jet.
In addition to transferring its shares in Airbus Canada, Bombardier is also transferring ownership of their divisions that make components for the A220 to a wholly owned subsidiary of Airbus called Stelia Aerospace. This transfer will also include the work that those divisions do on the Airbus A330 as well.
In exchange for Bombardier transferring out of the partnership and transferring ownership of the divisions that make components for the A220 and A330, Airbus is giving Bombardier a cash infusion of $593 million. $531 million of that will be given to Bombardier immediately upon closing of the agreement. Airbus Canada has also relieved Bombardier of any of its future debt obligations under the previous partnership agreement, which was finalized in 2018. With the assumption of dead obligations by Airbus and the cash payment, the value of the new agreement is brough to about 1.6 or 1.7 billion dollars.
Guillaume Faury, the CEO of Airbus, gave a reaction statement. “This agreement with Bombardier and the Government of Québec demonstrates our support and commitment to the A220 and Airbus in Canada. Furthermore it extends our trustful partnership with the Government of Québec. This is good news for our customers and employees as well as for the Québec and Canadian aerospace industry. I would like to sincerely thank Bombardier for the strong collaboration during our partnership. We are committed to this fantastic aircraft programme and we are aligned with the Government of Québec in our ambition to bring long-term visibility to the Québec and Canadian aerospace industry.”
The current Premier of Québec, François Legault, also gave a statement. “I am proud that our government was able to reach this agreement. We have succeeded in protecting paying jobs and the exceptional expertise developed in Québec, despite the major challenges we faced in this regard when we took office. We have consolidated the government’s position in the partnership, while respecting our commitment not to reinvest in the program. By opting to strengthen its presence here, Airbus has chosen to focus on our talents and our creativity. The decision of an industrial giant like Airbus to invest more in Québec will help attract other world-class prime contractors.”
Other officials expressed their opinion about the decision. “This agreement is excellent news for Québec and its aerospace industry. The A220 partnership is now well established and will continue to grow in Québec. The agreement will allow Bombardier to improve its financial situation and Airbus to increase its presence and footprint in Québec. It’s a win–win situation for both the private partners and the industry,” pointed out Pierre Fitzgibbon, Minister of the Economy and Innovation.
“This transaction supports our efforts to address our capital structure and completes our strategic exit from commercial aerospace,” said Alain Bellemare, President and CEO Bombardier, Inc. “We are incredibly proud of the many achievements and tremendous impact Bombardier had on the commercial aviation industry. We are equally 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’s and the Government of Québec’s stewardship.”
Kristi Tucker, Spokesman for Airbus in Mobile said, “This great news for Airbus, the program, and Mobile. Airbus’s goals are unchanged, and we are committed to the program’s success and delivering great aircraft to our customers! Here in Mobile, nothing changes. We are continuing to hire for our A220 and A320 programs, are on track for our first A220 delivery from Mobile in Q3 of this year, and on track for reaching rate four in the A220 program by the middle of the decade.”
The single-aisle market is a key growth driver, representing 70 percent of the expected global future demand for aircraft. Ranging from 100 to 150 seats, the A220 is highly complementary to Airbus’s existing single-aisle aircraft portfolio, which focuses on the higher-end of the single-aisle business (150-240 seats). At the end of January 2020, 107 A220 aircraft were flying with seven customers on four continents. In 2019 alone, Airbus delivered 48 A220s, with the further ramp-up to be continued.