In an unexpected but understandable move, Canada’s Bombardier and Europe’s Airbus have joined forces to build the Bombardier-developed C-Series small jetliners—a move that may significantly boost sales as well as do an end-run around the Trump Administration’s threat of a 300% tariff on the planes.
A new joint venture, formed for the purpose, will be owned 50.01% by Airbus, 31% by Bombardier and 19% by Quebec, which had earlier bought a $1 billion stake in the program. The joint venture will manufacture the planes at Airbus’s Alabama factory, where an added assembly line will be built.
Airbus is not paying anything for its share, and is assuming no existing debt for the program; its contribution is the connection to the company’s sales force and especially its manufacturing base, including the U.S. plant, originally built to better compete in the U.S. market. It also will have the right to buy out its partners after 7-1/2 years.
The Airbus connection will not only give the plane a U.S. footprint so that it will not be subject to tariffs, but may also overcome hesitancy from airlines that have been interested in the plane but concerned whether Bombardier has the scale and resources to keep the program going.
For Airbus, it gives the company a footprint in a growing market for 100-to-150 seat planes where neither it nor Boeing has had a product for several years.
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Delta stands by Bombardier order, says it won’t pay tariff
The Trump Adminstration’s threat to levy 300% tariffs on C-series planes built by Canada’s Bombardier is roiling relations between the U.S. and its Canadian and British allies, but it’s not disturbing Delta’s CEO Ed Bastian.
On an earnings call with financial analysts, Bastian said “We will not pay those tariffs. That is very clear. We intend to take the aircraft. I can’t tell you how this is going to eventually work out. There may be a delay in us taking the aircraft, as we work through the issues with Bombardier, who is being a great partner in this.”
The controversy is based on Boeing’s claim that Bombardier is getting unfair support from Canadian and UK governments, where the planes are built. Boeing says it’s been hurt by that; Bombardier has replied that Boeing and Airbus both pulled out of the 100-to-150 seat market, and that the CS-100 and CS-300 planes are not competitors at all.
Delta has 75 on order, with options for 50 more; it’s one of the largest orders for the planes, and the only big one in North America. Delta supports the claim that it’s not a competitor for Boeing; Bastian pointed out that when Delta went looking for planes that size, the only other bid they got was for used Embraer E-190s.
