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Airbus, Bombardier and Investissement Québec (IQ) announced on June 8 that all necessary regulatory approvals have been obtained and the C Series transaction will close on July 1, 2018.
The deal, originally announced in October 2017, gives Airbus a majority stake in the C Series Aircraft Limited Partnership (CSALP).
In an early morning conference call with the media, representatives from both companies and the Quebec government confirmed that the partnership’s head office, leadership team and final assembly line will be based in Mirabel, Que.
CSALP, which was originally established between Bombardier and IQ, is expected to benefit from Airbus’s global reach, scale, procurement organization and expertise in selling, marketing and producing the C Series aircraft family.
As previously announced, Bombardier will continue with its current funding plan of CSALP.
Due to the early closing of the partnership, the terms of this plan have been updated according to the following schedule: Bombardier will fund the cash shortfalls of CSALP, if required, during the second half of 2018, up to a maximum of US$225 million; during 2019, up to a maximum of US$350 million; and up to a maximum aggregate amount of US$350 million over the following two years, in consideration for non-voting participating shares of CSALP with cumulative annual dividends of two per cent.
“Closing the Airbus partnership ahead of the original schedule positions us to accelerate value creation for our shareholders as we combine the innovative C Series aircraft with the global scale and reach of Airbus,” said Alain Bellemare, president and CEO of Bombardier. “With this milestone achieved, we are focused on capturing growth opportunities across the portfolio and delivering our remaining turnaround plan objectives.”
Further financial information on the transaction will be provided later this year.
The C Series program continues to ramp up, with 17 aircraft delivered in 2017 and that number expected to double for 2018.
Bombardier and Airbus believe the aircraft’s demonstrated in-service performance as well as the finalization of their partnership will spark increased demand for the jet, allowing for the establishment of a second C Series final assembly line in Mobile, Ala., to supply U.S. customers.
The companies said the 100 to 150-seat market segment will see demand for 6,000 new aircraft over the next 20 years, with the C Series positioned to capture a larger percentage of those sales.
“This partnership extends our commitment to Quebec and to all of Canadian aerospace, and we are very glad to welcome so many C Series teammates into the extended Team Airbus,” said Airbus CEO Tom Enders.
“The strength of the entire Airbus organization will be behind the C Series. Not only will that enable this outstanding aircraft to fulfil its market potential, but we are convinced the addition of the C Series to our overall aircraft product offering brings significant value to Airbus, our customers and shareholders.”
Bellemare said the partnership with Airbus will ensure the aircraft’s success.
“This marks the beginning of a very exciting new chapter for the C Series and the Canadian aerospace industry … Airbus’s unmatched global scale, strong customer relationships and operational expertise are necessary ingredients for unleashing the full value of the aircraft. Together, we will create tremendous new value and opportunities for airlines, suppliers, shareholders and employees.”
Quebec’s Deputy Premier, minister of Economy, Science and Innovation and minister responsible for the Digital Strategy, Dominique Anglade, said the deal will ensure the growth of the C Series and protect the more than 2,000 jobs it supports in Mirabel.
“This partnership positions Montreal as Airbus’s largest research and development centre outside Europe, representing tremendous opportunities for our entire aerospace industry,” she said.
Navdeep Bains, Canada’s minister of Innovation, Science and Economic Development, said the deal was subject to review and approval under the Investment Canada Act.
“I have concluded my review under the Act and am satisfied that this investment will benefit Canadians by growing our aerospace sector and creating good jobs,” he said in a press release.
“The partnership will leverage Airbus’s $82-billion global supply chain, which will provide significant opportunities for Canadian aerospace companies. In addition, Canada will be recognized as the fifth home country for Airbus, the first such outside of Europe, symbolizing Airbus’s future commitment to Canada.
“This is a good day for Canada’s aerospace sector.”