Aviation World Surprised by Airbus’ Acquisition of a Majority of CSeries Program

Oct 17, 2017

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

The Bombardier CSeries is the newest plane in service in the world, and as of Monday, it has a new owner. Airbus just agreed to acquire a 50.01% stake in the CSeries program, a move that caught aviation observers by surprise. The world’s second-largest aircraft manufacturer is buying a majority stake in the world’s third-largest civil aircraft manufacturer’s signature new commercial aircraft program.

Montreal, Canada-based Bombardier will continue to own 31% while Investissement Québec, an investment arm of the government of the province of Quebec, will own 19%. According to Bloomberg, this transfer of ownership will close with none of the partners contributing any cash into the deal.

While that alone would be big enough news, there’s more to the announcement. Airbus will be building “additional C Series production at Airbus’ manufacturing site in Alabama, U.S.” The press release notes that this manufacturing line will be for “serving U.S. customers.”

This is good news for Delta, which in April 2016, ordered 75 of the CS100 in the largest order of the CSeries program, giving it a massive boost of confidence as the program struggled. But that order was cast into doubt recently with US regulators slapping a 300% tariff on the Canadian-built aircraft after Boeing filed a formal complaint. The US company alleges that Bombardier used government subsidies to sell the CSeries at below-market prices, hurting sales of its similar, but larger, 737.

That development dealt a significant blow to a program already over-budget and struggling to secure further orders. Most recently, Delta’s CEO has insisted that the airline won’t be paying the tariff, leaving the aviation industry wondering if the substantial order would be cancelled if the tariff were to pass the final regulatory steps.

With Airbus building the CSeries in the US, the tariffs may become moot. Airbus CEO Tom Enders was quick to push the development as creating jobs in the US.

Boeing reacted immediately, with a statement quoted by CNN saying that “this looks like a questionable deal between two heavily state-subsidized competitors to skirt the recent findings of the U.S. government. Our position remains that everyone should play by the same rules for free and fair trade to work.”

The Airbus purchase is a fascinating wrinkle in the CSeries-US tariff situation. It’s also what may turn out to be the lifesaver for the CSeries program, which has not been a commercial success despite having been hailed as one of the most comfortable economy classes you’ll find in the skies.

H/T: Bloomberg

What do you think about the acquisition?

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,650

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
  • Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
  • Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.