Well, the Airbus A220 program will now be fully owned by Airbus and the government of Quebec, as Bombardier completely exits the joint venture.
In this post:
What is the Airbus A220?
The A220 is one of the most innovative narrow body planes that we’ve seen in a long time. The plane is fuel efficient, it’s comfortable for passengers, and it serves the 100-150 passenger market, which is otherwise underserved.
The plane has been a popular option for airlines looking for capacity that’s greater than you’ll find on regional jets, but less than you’ll find on the 737 MAX 8/9/10 or Airbus A320/A321neo.
SWISS A220 cabin
Airbus only got involved with the A220 in 2018
While the plane is now widely known as the A220, Airbus didn’t actually design it. Rather this plane was initially designed by Bombardier, and the plane was known as the C Series.
However, in late 2017 it was announced that Bombardier planned to sell a majority stake of the C Series program to Airbus:
- Airbus purchased a 50.01% stake
- The government of Quebec purchased a 19% stake
That left Bombardier with just under a 31% stake. Once this deal closed in 2018, the plane was rebranded as the Airbus A220, joining Airbus’ lineup of passenger planes.
AirBaltic A220-300
Bombardier now exiting A220 program completely
This has been rumored for a while, but has now been finalized. Bombardier has just transferred remaining interest in the A220 partnership to Airbus and the government of Quebec, as Bombardier will receive 591 million USD for their existing stake.
With this change:
- Airbus will get a 75% stake in the program (an increase of 24.99%)
- The government of Quebec will get a 25% stake in the program (an increase of 6%)
Airbus notes that since they took control of the A220 program on July 1, 2018, total cumulative net orders increased by 64%, to 658 planes by the end of January 2020.
As Lain Bellemare, Bombardier’s CEO, describes the deal:
“This transaction supports our efforts to address our capital structure and completes our strategic exit from commercial aerospace. 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’ and the Government of Québec’s stewardship.”
Delta A220-100 first class seats
Bottom line
From the perspective of airlines and passengers this shouldn’t have many implications, as it will be business as usual. A220 production will continue, and nothing major should change.
This simply comes down to Bombardier wanting to exit the commercial aircraft space, and instead focus on business jets and rail.
All things considered this sure seems like a pretty smooth transition, when you consider that just a couple of years ago Airbus didn’t even have a stake in the program, and now they have a 75% stake.
What a big competitive advantage they have over Boeing, since Boeing doesn’t even have a plane for the 100-150 seat market.
I cry every time I see A220 instead of C100 or C300. What a failure on the part of the Canadian Government to succumb to the bullying of Trump and Boeing. The last laugh (which is no compensation at all) is that Boeing is now paying the price and lost a few jet fighters in the process. Embraer is a joke and Boeing will never be successful in supporting them against the C Series.
Canada...
I cry every time I see A220 instead of C100 or C300. What a failure on the part of the Canadian Government to succumb to the bullying of Trump and Boeing. The last laugh (which is no compensation at all) is that Boeing is now paying the price and lost a few jet fighters in the process. Embraer is a joke and Boeing will never be successful in supporting them against the C Series.
Canada had the first commercial 4 engine passenger jet (de Havilland Montreal) that they were forced to cut up and destroy after de Havilland UK decided corporately to go with the Comet (bloody disaster).
Avro Canada designed and flew the fastest supersonic fighters (the Arrow) back in the late 50's but the US Military convinced (forced) the Canadian Government (Avro) to cut them up and bury them in the mud in lieu of the Bomark Missile.
The big winner was NASA who took all the Avro engineers and hired them into the space program and thus went to the moon.
I believe consumer will be the ultimate victim of all those merger. With Boeing struggling with 737 Max and Airbus eating small fishes, it is going to be monopoly for Airbus in coming years. And we all know that monopoly is not at all good for a market.
kudos on Boeing, corporate stupidity at its height
Think again about Bombardier's bizjet line: looks like they're going to sell that to Textron!
https://www.skiesmag.com/news/textron-in-talks-to-buy-bombardiers-business-aviation-unit/
Looks like Bombardier's view on the world is "Trains good, planes bad!" :(
As someone who has lived the majority of his time in Canada (from South Africa) in British Columbia and now, due to contractual reasons, in Quebec, I would like to comment on some of this. Bombardier is a classic example of Quebec taking great ideas (Canadair in Ontario was a great, albeit unfortunate, end result) and messing them up. Think of Bechtel of the US. A brilliant contracting engineering company. SNC of Quebec? I know...
As someone who has lived the majority of his time in Canada (from South Africa) in British Columbia and now, due to contractual reasons, in Quebec, I would like to comment on some of this. Bombardier is a classic example of Quebec taking great ideas (Canadair in Ontario was a great, albeit unfortunate, end result) and messing them up. Think of Bechtel of the US. A brilliant contracting engineering company. SNC of Quebec? I know these people very well from the 80s in doing risk management. Terrible things happened then - and have happened recently.
Bombardier's rail business you talk about Lucky? A total disaster. I love the Frecciarossa which I travel regularly in Italy. But the mess in Toronto, in New York and Switzerland with cost overruns and being blocked from bidding.
Clearly, Like SNC this province is incapable of performing to first world standards. Without the net C$13 billion transfer payments it would be a third world maple syrup republic. That amount would amount to some half a trillion dollars (yes devalued Canadian dollars) being transferred to the US treasury.
The goal for Bombardier is to survive as an executive jet builder without being hammered into the ground by Gulfstream.
Before any Quebecois nationalist thinks I am anti-quebec (so very sensitive) CAE is a wonderful company for decades.
$591M for 30% that's a steal! I mean they would recoup that in 8-10 planes?
The whole C series to A220 has been a head scratcher to me. Bombardier couldn't find anyone to buy the darn thing unless they gave it away (to Delta).
They slap an A in front of it and now it is praised by all.
I don't get it.
With the A220 selling decently, why would they want to sell their stakes in it.
It would be interesting if you mentioned how many A220 are delivered, how many are on order, and the current production rate.
@JS "Sort of" being the key phrase. When you compare the Embraer E2 (2 + 2 seating) with the Airbus A220 (3 + 2 seating), passengers are going to take the A220 hands down. Paul Lucas has done a Wingin' It You Tube video on this subject. Not to say that there is anything wrong with the E2, but the A220 is nicer (IMHO).
The tariffs, as dumb as they were, had a lot less to do with Airbus taking control than Bombardier itself. Bombardier is a small(ish) company, and the development of the Cseries took over $5 Billon, a heck of a lot more than the $1.5B budgeted. Bombardier was already having capital problems before this as well. They simply didn't have the cash reserves to push the Cseries through.
This is going to be a trend....
The tariffs, as dumb as they were, had a lot less to do with Airbus taking control than Bombardier itself. Bombardier is a small(ish) company, and the development of the Cseries took over $5 Billon, a heck of a lot more than the $1.5B budgeted. Bombardier was already having capital problems before this as well. They simply didn't have the cash reserves to push the Cseries through.
This is going to be a trend. Smaller aerospace companies with good designs partnerning in some way with the bigger boys to push their new aircraft through development and regulatory approval. How long before Mitsubishi and Airbus form a partnership for their SpaceJet to counter the new Boeing-Embraer joint venture in the regional jet market?
Boeing actually does have a competitive airframe. Sort of. The Embraer E2 series.
With narrow body options from the A220 to the A321XLR Airbus really has a phenomenal range of superb products. What Boeing offers as competition is almost almost laughable. Boeing will never get the upper hand in this segment again. Airbus already has more than 60% market share and it is climbing fast. If Boeing isn’t kicking themselves for the stupid way they tried to kill off the C-series then pennies sure take a helluva long time to drop in Chicago.
Useful to recall here that the initial sale to Airbus (for $1) was a Hail Mary move to save the programme after the US government slapped a 300% tariff on the planes at Boeing's request. The deal allowed a shift in production to Airbus' US facilities to avoid the dodgy tariff. Bombardier can dress this up as wanting out if the commercial airplane market now, but it started as a creative response to bullying. As...
Useful to recall here that the initial sale to Airbus (for $1) was a Hail Mary move to save the programme after the US government slapped a 300% tariff on the planes at Boeing's request. The deal allowed a shift in production to Airbus' US facilities to avoid the dodgy tariff. Bombardier can dress this up as wanting out if the commercial airplane market now, but it started as a creative response to bullying. As much as I love this plane (having flown on the one pictured at the top of the article last month), the whole affair was quite distasteful.
At least it didn't become another Avro Arrow.
The situation with Boeing not having a newer plane in the 100 - 150 seat range is ironic at its best, and just another example of mismanagement at its worst. When Boeing acquired McDonnell Douglas, they inherited the MD-95, the latest derivative of the venerable DC-9. It had 3 -2 seating and efficient new engines. Boeing re-branded it the B-717 and then proceeded to kill it as quickly as possible. With a little finessing, it...
The situation with Boeing not having a newer plane in the 100 - 150 seat range is ironic at its best, and just another example of mismanagement at its worst. When Boeing acquired McDonnell Douglas, they inherited the MD-95, the latest derivative of the venerable DC-9. It had 3 -2 seating and efficient new engines. Boeing re-branded it the B-717 and then proceeded to kill it as quickly as possible. With a little finessing, it would have been still a viable airframe for this segment of the market. Boeing has a long, slow climb ahead of it to get out the mess they have put themselves in. More power to Airbus for recognizing this opportunity (and this coming from a person that used to say "If it's not Boeing, I ain't going!!").
@HiAperture
Most legal systems require a “consideration” for there to be an enforceable contract. So in circumstances like this, you would normally pay $1. Therefore “purchased” is indeed the correct word.
It is my understanding Airbus did not pay anything or take on any of Bombardier's debts in exchange for the 50.1% share, so is it really accurate to say they purchased anything at that time?
Isn't Boeing buying a stake in Embraer?