Comment
Bombardier back from financial brink
November 1st 2017
The industry was caught off guard last month when it was revealed Airbus had become Bombardier’s White Knight with its planned purchase of 50.01% ownership of the Canadian C Series single aisle jet programme. Read More » The new structure of the programme is scheduled for completion in the second half of this year.
Airbus had entered into discussions with Bombardier about investing in the Canadian company in 2015 but Airbus CEO, Tom Enders, decided to end the dialogue. The general view was that Airbus was no longer interested in buying into Bombardier.
As a result, Bombardier has been struggling for buyers for the C Series. Its search included Mainland aerospace manufacturer, COMAC.
While Airbus and Bombardier might be very happy with the restructured ownership of the C Series programme, Boeing definitely is not. Immediately after Enders said Airbus planned to open a Final Assembly Line (FAL) for the C Series at the A320 facility in Mobile, Alabana, it cried foul.
It alleged the new Mobile FAL decision was intended to circumvent duties of 300% the U.S. will impose on Bombardier for the sale of 75 C Series jets to Delta Air Lines. Boeing has called the Delta deal price dumping because the Canadian jet series programme has been so heavily subsidized by its government.
Whether Airbus will avoid the tariff is open to question. But for the industry in general it is important that an aircraft many experts regard as an excellent product – and which has not recorded a sale for more than 18 months - will have a new lease of life.
Analysts have said that many airlines, particularly in the Asia-Pacific, have not ordered C Series planes because of the programme’s precarious financial position. Now, with financial stability restored and with Airbus’ strong sales and support team marketing the jet, it is hoped more carriers in the region will follow Korean Air’s lead and add the C Series to their fleets.
For Boeing, in a region where single-aisle jets are the biggest sellers and will continue to be in coming years, the heightened Airbus presence in the single aisle market is a challenge. With the new Bombardier jet in its stable, Airbus can compete with the big selling B737 MAX 8 by squeezing it from below with the C Series and from above with the A321neo.
Some analysts have suggested Boeing may counter Airbus’ Bombardier investment by increasing its co-operation with Embraer. The Brazilian manufacturer’s new E-Jet family is a natural competitor to the C Series.
An Airbus/Bombardier versus Boeing/Embraer sales battle in the lucrative Asia-Pacific would be an interesting contest.
If such a structural shift in aircraft manufacturing did come to pass it would be good news for the region’s airlines. They would expect to negotiate better deals with the manufacturers as they compete for orders for single-aisle region’s fleets.
