17 October 2017•Update: 18 October 2017
By Barry Ellsworth
TRENTON, Ont.
Shares of Airbus SE jumped Tuesday on news the giant European aerospace company signed a deal with Canada’s Bombardier for a 50.01 percent stake in the CSeries passenger jet.
The move comes after rival Boeing convinced the U.S. Commerce Department to impose a 300 percent duty on the aircraft, claiming the new Bombardier CSeries was subsidized by the Quebec government.
Montreal-based Bombardier had signed a deal to build and deliver 75 of the new jets to Delta Air Lines in a deal worth nearly $US6 billion but the tariff jeopardized that agreement.
According to the Bombardier Airbus deal announced late Monday, the planes will be manufactured at the Airbus plant in Mobile, Alabama, thus avoiding the import fee.
The deal is an unusual one, as the much larger Airbus company paid nothing for the shares in the CSeries, but it has the money and worldwide connections and manufacturing facilities to give Bombardier’s jets a big boost. With the deal, the French company also scores a leg-up on bitter rival, American-based Boeing.
“Combining the CSeries with Airbus’s global scale creates a remarkable business and together we will take the CSeries program to new heights,” Bombardier CEO Alain Bellemare told the media in a conference call.
Airbus chief executive Tom Enders tweeted: “A moment of aviation history. Bienvenue to our friends @Bombardier! Here’s to many years of success for the #CSeries.”
For its part, Boeing termed the deal a questionable agreement between two state-subsidized competitors.
The deal has to be approved by the Canadian government and the U.S. government may see it as an end run by Bombardier to avoid the 300 percent tariff.
But provided the agreement stands, it will save about 4,000 jobs at Bombardier’s facility in Ireland. As well, the building of the CSeries planes is expected to create more than US$30 billion in business and more than 22,700 American jobs in 19 states.
Canadian Prime Minister Justin Trudeau and U.S. President Donald Trump reportedly spoke by telephone Monday and the aerospace dispute was mentioned, but details of the conversation were not released.
With the 50.01 percent stake in the CSeries, Airbus becomes the majority shareholder.
Airbus shares rose 2.8 percent in Paris early Tuesday that boosted the value of the company to $US72.2 billion.
Bombardier’s shares soared 24 percent on the Toronto markets on the heels news of the deal. Shared were up 56 cents to $2.94.
