October 17, 2017
Airbus Buying 50.01% of Bombardier’s C-Series to Dodge 300% US Tariff
Airbus announced its intent purchase a majority stake in Bombardier’s C Series aircraft program. This could be significant as Airbus is currently the world’s second largest aircraft manufacturer and Bombardier is the third largest. When the deal is finalized (expected in late 2018), Airbus will own a 50.01% of the C Series program, Bombardier will own 31%, and Investissement Québec will own 19%. The C-Series is Bombardier’s newest line of aircraft.
The story gets more interesting. After Delta recently ordered 75 of the new Canadian aircraft, Boeing filed a formal complaint alleging Bombardier was able to sell it at an uncompetitive price because of Canadian government subsidies. The Trump administration sided with Boeing and imposed a 300% import tariff on the C-Series to ‘level the playing field’.
Here’s the twist. If Airbus’s acquisition is approved, it will bring final assembly of the C Series aircraft its US plant in Alabama. Since it will be assembled in the United States, the government will no longer be able to impose those 300% tariffs. What do you make of this deal?