Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program -- Update
February 07 2020 - 4:03PM
Dow Jones News
By Jacquie McNish and Benjamin Katz
Airbus SE is in advanced talks to acquire Bombardier Inc.'s
remaining stake in the two companies' joint A220 commercial
jetliner program, according to people familiar with the matter.
A deal for Bombardier's 34% stake could be reached as early as
next week, ahead of both companies' earnings reports, the people
said. The Quebec government, which holds a 16% stake in the
program, is likely to retain that holding, according to one of
these people.
Financial terms of the planned stake sale couldn't be learned.
While in an advanced stage, talks could still fall apart, or the
contours of the potential deal could change significantly.
The deal, if consummated, would mark a formal end to the
Canadian manufacturer's more than decadelong attempt to break
Airbus's duopoly with Boeing Co. Bombardier set off to build a
narrow-body commercial jet that could compete with the two giant
plane makers. However, the plane's development was beset by delays
and cost overruns.
Originally called the CSeries, the aircraft was well received by
customer airlines, but sales were disappointing, partly because of
concerns over the sustainability of the program. Airbus took a
50.01% stake in the CSeries program in July 2018. It paid virtually
no cash for the stake but committed to throwing its global
marketing heft behind the jet. Bombardier, meanwhile, committed to
covering the program's losses over a set period.
Last month, Bombardier said it had started a strategic review of
its holding in the aircraft program after the latest financial
projections pushed out the forecast for the program reaching break
even.
Under the terms of the proposed new stake sale, Airbus would
absorb the $350 million in losses that Bombardier was required to
cover this year, according to the people familiar with the
matter.
The Montreal-based manufacturer formally launched the CSeries in
2008 with the goal of developing an aircraft that could compete
with Boeing's 737 MAX and the Airbus A320neo narrow-bodies. But the
program had struggled to drum up enough sales in competition with
the two global incumbents and faced concern from airlines over the
program's financial precariousness.
Write to Jacquie McNish at Jacquie.McNish@wsj.com and Benjamin
Katz at ben.katz@wsj.com
(END) Dow Jones Newswires
February 07, 2020 15:48 ET (20:48 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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