Image: Marcelo Cáceres

APEX Insight: APEX Media Spotlight gathers different perspectives on a passenger experience announcement, product launch or issue from top industry sources. In this installment, we’ve scoured the media for reactions to Bombardier’s decision to hand majority stake of its C Series program to Airbus.

Bombardier’s journey to bring a short-haul jet to market has been anything but simple. In 2008, the Canadian aerospace firm launched the C Series project in an effort to challenge Airbus and Boeing’s dominance in the manufacturing of short-haul jets. Costs and delays nearly bankrupted Bombardier, before it was bailed out by Quebec’s provincial government to the tune of $2.2 billion in 2015. The following year, Delta Air Lines placed an order for 75 C Series jets, keeping the program airborne. However, acting on a complaint made by Boeing, the US Commerce Department imposed a 300% tariff on C Series imports to the country, which risked sending the program into a tailspin.

Last week, on October 16, another twist in the tale emerged. Bombardier announced it would cede just over half of the C Series program to Airbus, at no cost. Bombardier and Investissement Québec, the province’s investment arm, will own about 31% and 19% respectively.

Speaking to C Series staff at Bombardier’s assembly plant in Mirabel, Quebec, Airbus CEO Tom Enders, said, “I think it’s a good business deal for Airbus, it’s a good deal for Bombardier, Quebec, because we know what we can deliver to this endeavor.”

Alain Bellemare, Bombardier’s president and CEO, defended the no-cash deal. “This is wrong, looking at it from a penny standpoint. It’s being pennywise and pound foolish,” said Bellemare. “What Airbus is creating is huge value. Where we’re benefiting here is years and years of development, of their supply chain network, of their marketing know-how, of their after-market network. All of that is coming to us.”

Airbus CEO Tom Enders, Airbus COO Fabrice Brégier and Bombardier CEO and president Alain Bellemare, addressed C Series staff in Mirabel, Quebec, on October 20. Image: APEX Media

What the Media Says

Does the media think the deal is a “win-win-win situation for everyone,” as described by Airbus CEO Tom Enders? Or is it, as Boeing says, “A questionable deal between two heavily state-subsidized competitors to skirt the recent findings of the US government.”

Who Wins?

The Economist wrote in its October 20 issue that, while the deal is a triumph for the C Series program, it “should not obscure a more troubling trend,” which, it argues, is the increasing dominance of Airbus and Boeing in aerospace: “Instead of breaking their duopoly, Bombardier was consumed by it.”

In an editorial published on October 17, the Financial Times reached a similar conclusion. “On an optimistic reading, this [deal] will neatly solve several problems,” the newspaper wrote. “It could defuse the trade spat by the old technique of ‘tariff-jumping,’ or avoiding border duties by re-siting production in the destination market.” However, it also highlighted the fact that Airbus isn’t paying for its majority stake in the C Series. “It is a weaker company inviting in a stronger one to get around a trade barrier that threatens to cripple its business.”

Image: APEX Media

The Politics of the Deal

The Toronto Star editorial noted that Canadian taxpayers have paid well over a billion dollars into the venture “for the privilege of subsidizing jobs making planes in Alabama.” However, the newspaper also acknowledged that “it may be the best Bombardier could manage given the crippling 220% duties imposed by the Trump administration.”

With Bombardier among Northern Ireland’s biggest manufacturing employers, Dawn Foster, a commentator for The Guardian, argued that the C Series saga offers “an indication of what might befall the UK after Brexit.” Foster said the “irony of Europeans coming to the rescue after British ineffectiveness will have stung [Theresa] May deeply.”

A similar point was made by Financial Times columnist Michael Skapinker. Noting British Prime Minister Theresa May’s continuing struggle to make a breakthrough in the UK’s Brexit negotiations, he wrote, “EU leaders are taking a hard line while searching for small ways to help Mrs May. Now, French-infused Airbus has swooped in to do just that. What panache.”

Image: APEX Media

What Does Bombardier Get?

Nils Pratley, The Guardian’s financial editor wrote that, while Bombardier has to accept its C Series stake will shrink from 62% to 31%, it can console itself with the fact that something is better than nothing, which was the likely alternative.

Writing for CBC News, Canadian economic commentator Don Pittis, shared an upbeat analysis of the announcement. “Boeing’s attempt to sabotage Bombardier’s dazzling new jet is the best product review the C Series has ever had,” he argues. “And almost bizarrely, Bombardier’s plan to donate a majority stake in the aircraft to the world’s second largest aerospace company may be the Canadian company’s shrewdest investment.”

Assessing the merits of the deal for Bombardier, Bloomberg columnist Chris Bryant posed a question: “Is it better to own a larger majority stake in an aircraft program valued at just $2 billion, which hasn’t secured a major order for 18 months; or a minority stake in one with much better prospects?” Bryant argued Bombardier’s finances are too weak to make the C Series a success in the face US government tariffs. Therefore, the C Series program stands a better chance with the Airbus deal, he suggested. “In bringing a trade case against Bombardier, Boeing seems to have forgotten the first law of all playground scuffles: if you pick a fight, always be sure to land the knock-out punch. Airbus just delivered it.”

 

 

Ari is the news editor at APEX Media.