On Monday, Airbus announced that it would take control of the embattled C-Series aircraft program from rival Bombardier, building a strong transatlantic alliance in a bitter feud with Boeing.
Bombardier’s C Series has come under attack again from Boeing, which alleged that the aircraft makers had sold the jet of 100 to 150-seats to Delta Air Lines at prices that were absurdly low.
The Commerce Department in the U.S. levied a 300% preliminary import tariff on the aircraft, setting up a huge diplomatic standoff that has brought in the UK and Canadian governments.
The deal with Airbus will enable the Canadian airplane maker to sidestep the huge tariff on its C Series by have the planes assembled in the U.S.
Under this new agreement, Airbus will acquire a stake in the program of 50.01%. Most importantly, the plane maker based in Europe will establish a new second final assembly line for the C Series in Alabama where already it builds big, single-aisle planes for airlines in the U.S. The facility is to be expanded to make more room for the C-Series manufacturing.
This arrangement will potentially open the door for additional carriers in the U.S. to purchase the jet. Spirit Airlines and JetBlue Airways both big clients of Airbus; have voiced their support previously for the position of Bombardier against the Commerce Department. The deal also might save business Airbus has with Delta since the airline has stated it would not pay that large tariff.
Airbus has denied that the goal it has was to avoid the tariffs established by the U.S. on the new airliner, but the plans for the assembly line that were unveiled mean Bombardier’s C Series will be made in the U.S.
A spokesperson for Boeing said the deal looked to be questionable between two competitors that are heavily subsidized by governments set up to skirt the recent U.S. government findings.
The Boeing spokesperson added that its position is that everyone should stick to playing by the same set of rules for fair and free trade to work.
No further investment upfront will be made by Airbus in the C-Series jet, but Bombardier will gain access to the Airbus’ greater scale in sales, marketing, supply chains and customer support.
Under this deal, Bombardier and Investissement Quebec are to be owners of approximately 31 percent and 19 percent of the new C-Series program respectively.