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Money Airbus Lifts A220 Jetliner Stake to 75% as Bombardier Exits

10:00  13 february  2020
10:00  13 february  2020 Source:   msn.com

Airbus in talks to buy out Bombardier stake in A220 program

  Airbus in talks to buy out Bombardier stake in A220 program Airbus SE is in talks to buy out Bombardier Inc.’s stake in the A220 jetliner program, according to people familiar with the matter. The negotiations between the companies are at an advanced stage, said the people, who asked not to be identified because the talks are private. The deal could be announced as early as this week, with both companies scheduled to report earnings on Feb. 13.Bombardier invested more than $6 billion in the A220’s development before ultimately ceding control of the program to Airbus in 2018 as it struggled to sell the single-aisle plane.

Airbus SE increased its stake in the A 220 jetliner to 75 %, consolidating control of the narrow-body model as debt-laden Bombardier Inc. exits the Airbus , which previously held about 50% of the venture, will pay 1 million to the Canadian firm. The government of Quebec lifted its share to 25

Airbus SE plans to increase jetliner deliveries to an all-time high in 2020 as it irons out production snags involving the A320 narrow-body model while Boeing Co.’s rival 737 Max remains grounded. Airbus Lifts A 220 Jetliner Stake to 75 % as Bombardier Exits .

(Photo credit NICHOLAS KAMM/AFP/Getty Images) (Photo credit NICHOLAS KAMM/AFP/Getty Images)

Airbus SE increased its stake in the A220 jetliner to 75%, consolidating control of the narrow-body model as debt-laden Bombardier Inc. exits the program to preserve cash.

Airbus, which previously held about 50% of the venture, will pay $591 million to the Canadian firm. The government of Quebec lifted its share to 25%, the companies said Thursday.

The transaction expands Airbus’s bet on a 100- to 150-seat model that fits in below most of its A320-family jets and Boeing Co.’s grounded 737 Max lineup. For Montreal-based Bombardier, the deal closes the book on more than $6 billion of investment that was meant to challenge the two top planemakers but instead left it saddled with debt that has forced the company into a breakup.

Bombardier sells off A220 stake, ending C Series chapter

  Bombardier sells off A220 stake, ending C Series chapter Bombardier sells off A220 stake, ending C Series chapterBombardier Inc. is transferring its 33.6 per cent stake in the partnership that builds the plane formerly known as the C Series to Airbus SE and the government of Quebec, the companies said in a statement issued early Thursday. Airbus paid Bombardier $591 million to boost its stake to 75 per cent, while Quebec now holds the remaining 25 per cent.

The Airbus A 220 is a family of narrow-body, twin-engine, medium-range jet airliners. The airliner was designed and originally marketed by Bombardier Aerospace, as the Bombardier C Series.

Following Bombardier selling the CSeries aircraft program to Airbus to avoid US duty, Airbus has renamed the aircraft type as the Airbus A 220 . The Trump administration sided with Boeing, and proposed a duty of ~300% on US airlines buying this plane, as a penalty. Delta has 75 CSeries planes

“This is good news for our customers and employees as well as for the Quebec and Canadian aerospace industry,” Airbus Chief Executive Officer Guillaume Faury said. Bombardier has been released from future capital requirements while safeguarding 3,300 jobs in Quebec, according to the statement.

The announcement on the A220 came as Airbus posted full-year earnings before interest and tax that narrowly beat estimates.

Earnings Highlights:

Airbus slumped to a net loss after a 3.6 billion-euro penalty for a bribery settlement and a 1.2 billion-euro hit against lower export prospects for the A400M airlifter.The corruption settlement will hurt cash flow this year, as will the A400M, says Jefferies analyst Sandy Morris.Company needs to maximize “financial firepower” until full repercussions of Max crisis aree known: Morris.

The A220 offers Airbus scope for expansion in a single-aisle plane market where its own A320 is sold out for years to come, and Boeing’s rival Max model remains grounded after two fatal crashes with no return likely before the middle of the year.

Bombardier to make a 'positive' announcement this week, says Quebec minister

  Bombardier to make a 'positive' announcement this week, says Quebec minister Bombardier to make a 'positive' announcement this week, says Quebec ministerThe minister says he has read "all the information" but that he is "not comfortable talking about it yet," opting to leave the announcement to the company.

Airbus Takes Majority Stake in Bombardier C-Series. Following a Boeing complaint that Bombardier sold 75 of its C Series jets to Delta Air Lines Inc. for “absurdly low prices,” President Donald Trump’s administration slapped the aircraft with import duties of 300 percent in recent weeks

PARIS (Reuters) - European planemaker Airbus (PA: AIR ) has reached a deal to buy the remaining stake of Canadian plane and train maker Bombardier (TO:BBDb) in the A 220 passenger jet program, it said on Thursday. The deal signals Bombardier 's exit from commercial aviation by transferring its

Originally named the C Series, the A220 won praise for fuel-efficient engines, composite wings and an airy cabin featuring large windows. But the plane ran more than two years late and about $2 billion over budget, and had trouble attracting buyers in an industry dominated for decades by Airbus and Boeing.

Tariff Threat

The situation came to a head in 2017 after U.S. President Donald Trump’s administration imposed tariffs of about 300% on the C Series following claims from Boeing that Bombardier had benefited from illegal state aid.

While those duties were struck down by a U.S. trade panel, Airbus intervened with a plan to acquire a 50.01% stake in the program through a cash-free deal. The European group also plans to build the plane at its own plant in Alabama.

Though the deal closed in 2018, Bombardier continued to struggle with its debt pile, and said last month that it was looking at quitting the A220 altogether as a production ramp-up increased cash requirements. It injected $575 million in 2018 and 2019 and had committed $350 million for this year.

'Major announcements' to accompany Bombardier earnings report Thursday — minister

  'Major announcements' to accompany Bombardier earnings report Thursday — minister Amid suggestions that Quebec aerospace giant Bombardier may be poised to announce the sale of its rail division, Quebec Economy Minister Pierre Fitzgibbon was tight-lipped Wednesday about what’s in store."I know everything that's going to happen, but I'm not at ease to talk about it," Fitzgibbon told reporters. Bombardier's board is meeting today, and the minister said he can't reveal anything ahead of Thursday's announcement. The company will release its financial results for 2019 at 8 a.m. ET Thursday.

Airbus ’ new " A 220 " designation places its new line of smaller jets from Bombardier below Airbus ' existing The A 220 now enters a new phase in its career with all Airbus ’ resources behind it to further its commercial IN PICTURES: First flight of Bombardier 's CSeries jetliner (story continues below).

The deal signals Bombardier 's exit from commercial aviation by transferring its remaining interest in Airbus Canada to the main parent Airbus SE European planemaker Airbus has reached a deal to buy the remaining stake of Canadian plane and train maker Bombardier in the A 220 passenger jet

Following its exit, Bombardier has already received $531 million, with $60 million to be paid through 2021. The agreement cancels Bombardier warrants owned by Airbus, which will also take over work packages for the A220 and the larger A330 through its subsidiary Stelia Aerospace, securing 360 jobs.

Bombardier Breakup

The completion of Bombardier’s withdrawal advances the breakup of the former conglomerate.

The company sold its turboprop-plane business to Longview Aviation Capital Corp. for $300 million in a deal completed last year, while Mitsubishi Heavy Industries Ltd. agreed to buy the CRJ regional jet arm for $550 million in June and Spirit AeroSystems Holdings Inc. announced the $500 million purchase of an A220 wing plant in Belfast, Northern Ireland, in October.

Bombardier is also exploring a combination of its rail business with French rival Alstom SA, Bloomberg News reported Jan. 22. Such a deal would have an enterprise value of $5 billion to $6 billion, according to Bloomberg Intelligence.

At the same time, the embattled manufacturer is mulling the disposal of its corporate-jet operation, the sole remaining aviation business, to Textron Inc., maker of Cessna planes, the Wall Street Journal has said. That could fetch $4 billion to $5 billion, though both business may not be sold.

Bombardier should look to sell either train or jet unit to deal with debt: Quebec economy minister

  Bombardier should look to sell either train or jet unit to deal with debt: Quebec economy minister Pierre Fitzgibbon responded to a Wall Street Journal report that said the transportation company, headquartered in Montreal, is in talks with U.S.-based Textron Inc., about selling its business-jet division.Pierre Fitzgibbon was responding to a Wall Street Journal report that said the storied transportation company, headquartered in Montreal, is in talks with U.S.-based Textron Inc., about selling its business-jet unit.

This article lists firm orders and deliveries for the Airbus A 220 family of aircraft (formerly known as Bombardier CSeries), currently in production by Airbus Canada Limited Partnership

PARIS (Reuters) - European planemaker Airbus (PA: AIR ) has reached a deal to buy the remaining stake of Canadian plane and train maker Bombardier (TO The deal signals Bombardier 's exit from commercial aviation by transferring its remaining interest in Airbus Canada to the main parent Airbus

Debt Burden

Bombardier’s debt burden is steep, rising to $14.8 billion from $10 billion when items including pension liabilities and operating leases are taken into account, according to a December report from S&P Global Ratings.

Fitch Ratings cut its rating last month to CCC+, seven steps below investment grade. S&P and Moody’s Investors Service lowered their outlooks to negative.

The stock plunged last month on concern about dwindling cash reserves and the demand from Airbus to pour money money into the A220. The shares closed at C$1.57 Wednesday. Bombardier is scheduled to report earnings later Thursday.

Quebec Premier Francois Legault said as recently as last month that additional money for the A220 was “out of the question.” The province, which has backed Bombardier for years to preserve jobs, initially invested $1 billion for a 50% stake in the former C Series. It will now own 25%, from up 16%.

(Updates with earnings details in box)

--With assistance from David Scanlan and Christopher Jasper.

To contact the reporter on this story: Charlotte Ryan in London at cryan147@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, ;Brendan Case at bcase4@bloomberg.net, Christopher Jasper

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.

Kevin Carmichael: Bombardier may have failed, but at least it tried to win .
Kevin Carmichael: Bombardier may have failed, but at least it tried to winThe sight of Bombardier Inc. shrinking before our eyes got me thinking about my conversation last fall with Tony Chahine, founder and chief executive of Myant Inc., which makes state-of-the-art computerized textiles in Toronto.

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