- Bombardier (BBD.B) has transferred its remaining shares in Airbus Canada to the Quebec government and Airbus
- The move signals the company’s departure from commercial aviation
- Company to received C$783.2 million, with the remaining C$79.3. million to be paid out during 2020-21
- Quebec premier Francois Legault hopes Airbus’ presence will attract investment in the province
- BBD.B shares were down 2.3 per cent and traded at C$1.63
Canadian aerospace company Bombardier has sold its remaining interest in Airbus Canada.
The move signals the company’s exit from commercial aviation, with parent Airbus now holding a 75 per cent interest in Airbus Canada and the government of Quebec holding the remaining 25 per cent.
Bombardier will receive C$703.7 million (US$531 million) on closing and another C$79.3. million (US$60 million) will be paid out during 2020-21.
Under the agreement, all Bombardier warrants held by Airbus are cancelled and the company does not have to satisfy future funding capital requirements to Airbus Canada.
Airbus has also acquired the A220 and A330 work package production capabilities from the company and can redeem the government’s stake in Airbus Canada in 2026.
President and CEO Alain Bellemare said the company had a significant impact on commercial aviation and that new ownership of the A220 program will boost the local economy.
“This transaction supports our efforts to address our capital structure and completes our strategic exit from commercial aerospace,” he said.
“We are incredibly proud of the many achievements and tremendous impact Bombardier had on the commercial aviation industry (and) equally proud of the responsible way in which we have exited commercial aerospace, preserving jobs and reinforcing the aerospace cluster in Quebec and Canada,”
“We are confident that the A220 program will enjoy a long and successful run under Airbus’ and the Government of Quebec’s stewardship.”
Airbus CEO Guillaume Faury thanked Bombardier for their partnership saying the move will better accommodate consumer demand for the A220 aircraft.
“(The) agreement with Bombardier and the Government of Québec demonstrates our support and commitment to the A220 and Airbus in Canada (and) it extends our trustful partnership with the Government of Quebec,” he said.
“This is good news for our customers and employees as well as for Quebec and Canadian aerospace industry,”
“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 industry.”
According to Airbus, total cumulative net orders for the A220 aircraft have increased to 658 units at the end of January 2020 – a jump of 64 per cent – since it took majority ownership of the program in July 2018.
Quebec premier Francois Legault said he hopes the presence of Airbus in the city will attract investment into the region.
“We have consolidated the government’s position in the partnership, while respecting our commitment not to reinvest in the program,” he said.
“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.”
It is a sentiment echoed by the province’s economy and innovation minister Pierre Fitzgibbon, who described it as a “win-win situation” and “allow Bombardier to improve its financial situation.”
Bombardier initially developed and marketed the A220 aircraft as part of the company’s C-series until a joint-venture company with Airbus – C Series Aircraft Limited Partnership – was renamed Airbus Canada Limited Partnership and adopted the latter’s logo and livery in July 2019.
Production of the aircraft’s cockpit and tail-end section will continue to be done at Bombardier’s Saint Laurent site, but under Airbus’ subsidiary Stelia Aerospace, for a transitionary period of about three years.
It will then be transferred to Stelia’s Mirabel site, where the A220’s final assembly line is located.
Two versions of the single-aisle aircraft are available – the standard A220-100, and the larger A220-300. The former model competes with Embraer’s E195-E2 while the latter competes with Boeing’s 737 Max 7 and Airbus’ A319neo.
The aircraft is currently used by Swiss International Air Lines, airBaltic, Korean Air, Air Tanzania, Delta Airlines, Egypt Air and Air Canada.
Bombardier shares were down 2.3 per cent, with shares currently trading at C$1.63.