Airbus has announced that they will take a majority stake in Bombardier’s CSeries jetliner program that will give them the ability to close the trade dispute with Boeing. Following this report, Bombardier shares jumped more than 20% while Airbus’s shares rose around 5%.
Airbus will receive a 50.01% stake to produce and deliver the CSeries while Bombardier will only get one dollar for the stake in exchange for Airbus’s purchasing and marketing power to support the aircraft. However, $700 million in risks related to cost overruns is expected to come in the following years.
This deal between Airbus and Bombardier would settle the CSeries jet production at Airbus’ Alabama assembly plant where import duties will be exempt and new U.S. jobs will be created, expected to be approved within the next 6-12 months. The CSeries will be have an improved economies of scale and a better sales network. Airbus’ global footprint will also be expanded and can potentially open up further deals in other sectors in Canada.