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Airbus, Bombardier plan for long C Series partnership despite take-out clause

Last Updated Oct 20, 2017 at 5:20 pm EST

MONTREAL – Airbus and Bombardier plan to remain strategic partners on the C Series program even after the European aerospace giant is able to buy out its minority partners, the chief executives of both companies said Friday.

According to terms of the deal announced Monday, Airbus has the option to buy out Bombardier (TSX:BBD.B) in about seven years, and the Quebec government in 2023.

Following a joint appearance with Bombardier CEO Alain Bellemare at the Montreal Board of Trade, Airbus CEO Tom Enders said that’s not the company’s plan.

“We have no intention to buy out the others because we know they are great partners and if they want to stay on the journey going forward they are very welcome to that,” he told reporters.

He said the priority is to close the deal next year that gives Airbus majority control, build a second assembly line in Alabama, sell more aircraft and make the program a huge success.

Bellemare said the Montreal-based company also intends to remain a part of the program, but even if that should change, the agreement ensures that the program will continue to support jobs in Canada until 2041.

“The best guarantee of jobs is to perform,” he said.

Bellemare said Airbus’ support will assuage customers who were worried about the future of the C Series.

He said the result will be many more sales that will benefit Bombardier’s Mirabel, Que., production facility even though a second assembly line will be built in Alabama.

Bellemare reacted forcefully to questions about Airbus not paying any cash for the transaction.

“The point is it’s not coming from dollars, it’s coming from the value that they bring to the program and that is the reason why the value of this program will more than double,” he told reporters.

The aerospace executives and Premier Philippe Couillard travelled to Mirabel to speak with Bombardier employees, who gave Enders a hearty welcome.

Bombardier executive chairman Pierre Beaudoin, who guided the launch of the C Series and its costly development for US$5.4 billion, said the company’s founding family isn’t in mourning over the sale of a majority stake in the program to Airbus.

During a brief interview with The Canadian Press Friday in Mirabel, he said the Quebec company had found in Airbus a partner that would allow to achieve the “total success” of the program.

Union representative Dave Chartrand said employees are concerned about the potential negative impact of a second production line in the U.S., but view the partnership with Airbus as the best move to secure the program’s future.

“I wish Bombardier on its own could have become a third world player, could have competed with these two giants in the aerospace industry, could have sold 3,000 airplanes. But there’s a difference between your heart and your head,” he said in an interview.

Earlier, Enders told business leaders that he expects Boeing won’t give up easily after launching a trade action with the U.S. government against the C Series that has resulted in 300 per cent preliminary duties on imports.

“The B guys will certainly throw everything into our way they can figure so the coming months might be a little bit rough and tough but we’ve seen that before,” he said.

Ultimately he said the C Series will weather the challenge and prevail, but the partnership will change the global aerospace industry.

“There is no doubt we are throwing a big stone into the global aerospace industry pond and there are ripples and there will be new alliances formed as a reaction to it, new products being launched,” he said.

“My philosophy is it’s much better to be proactive and throw the first stone into the pond than reacting to the initiatives of others.”

Enders added that Canadians have nothing to fear from Airbus, saying the company will add to Montreal’s large aerospace cluster and provide more opportunities for local suppliers, universities and aerospace training schools.

“We’re not taking anything away here,” he said, adding that he knows there are concerns by some members of the public.

“If anything we will add, we will add to Canada, we will add to the success of the Canadian aerospace industry, Bombardier and suppliers and certainly we will add to the world-wide success of Airbus.”

He said Airbus already has a presence in Canada, employing about 2,000 people and working with suppliers that generate about $1 billion of business.

Enders said Airbus’ designation of Canada as its fifth home country opens the door to it growing its Canadian presence in the military, space and helicopter sectors of its business.

Airbus’ supporters in Alabama are already lobbying in Washington to show how the partnership will create U.S. jobs.

“That’s what President Trump wants. More jobs in America, so how can you be against that?”

— With files from Julien Arsenault in Mirabel, Que.