DECEMBER 2017 AUSTRALIAN AVIATION 65MY ENEMY’S ENEMY
manufacturing site in Alabama, US.
This strengthening of the program and
global cooperation will have positive
effects on Québec and Canadian
aerospace operations,” the partnership
said when announcing the news.
The deal also includes “call rights”
where Airbus could acquire all of
Bombardier’s interest in CSALP at
“fair market value”, the announcement
reads. That call right is “exercisable
no earlier than 7.5 years following the
closing, except in the event of certain
changes in the control of Bombardier,
in which case the right is accelerated”.
Bombardier, meanwhile, will have
a corresponding “put right” where “it
could require that Airbus acquire its
interest at fair market value after the
expiry of the same period”.
Finally, CSALP could acquire
Investissement Québec’s interest
at fair market value “under certain
conditions”, starting in 2023. It could
also sell its share in CSALP at the same
time as Bombardier under “tag along
rights”.
While Airbus executives initially
raised expectations of an early
European takeover of the whole
C Series operation, later commentary
walked back that line. Further details
have emerged since, including the fact
that Bombardier will spend several
hundred million US dollars on the
Mobile manufacturing aspect of the
deal.
Crucially, “at closing, there will
be no cash contribution by any of the
partners, nor will CSALP assume
any financial debt,” Airbus said when
announcing the deal.
But why now? François Cognard,
vice president for sales in Australasia
and South East Asia at Bombardier
Commercial Aircraft, tells Australian
Aviation that “this partnership stemmed
from our strategic approach to ensure
that the C Series aircraft realises its
full potential and value globally. We
think that it will greatly accelerate the
commercial success of the C Series
aircraft program,” he said.
“We explored this opportunity back
in 2015. However, we were both in a
different position than we are today. It
is all about timing. Two years ago, we
were both focusing on developing new
aircraft programs. This time, the stars
were aligned.
“Now that Bombardier has
completed the C Series and Airbus has
certified both the A320 and the A350,
we are more focused on the same areas
of synergies. We have designed and putin service an innovative aircraft and we
now need to focus on making sure that
it becomes a commercial success.”The future state of play for the
Airbus-C Series tie-up still requires a
crystal ball
Few things are entirely predictable at
this early stage, and the deal is not yet
done.
“It’s still an engagement, not a
marriage,” noted Air Lease Corporation
boss and influential bellwether of
industry opinion Stephen Udvar-Hazy
of the tie-up.
So, what seems likely? First, and
probably most important, Airbus has
goals of keeping the C Series and its
advances out of the hands of airframers
in China and Russia in particular, who
have long coveted the technologies
for their own, less internationally
persuasive, aircraft programs. Stability
for the C Series, too, is a gain, with
flyers who love the spacious cabin
interior and wide seats breathing a
sigh of half-relief, half-anticipation to
see which airline will next order the
passenger-pleasing narrowbody.
The supply chain implications are
also significant, particularly given
the amount of involvement by UTC
(parent of Pratt & Whitney) on the
C Series, and indeed on the A320neo
family program, but also with Rockwell
Collins (itself in the process of a
tie-up with UTC, with the new parent
potentially being known as Collins
Aerospace).
And the political situation,
particularly in Canada where the
name Boeing is now almost anathema
as a result of the Boeing-driven
trade dispute, and in the UK where
significant parts of the C Series are
manufactured, cannot be overlooked
either.
Some movement around the
edges of that trade dispute, which
has seen condemnation from many
in the industry – including key
Boeing customers – is also likely,
particularly since the Airbus-C Series
announcement included final assembly
within the United States. While Boeing
and some observers noted at the time
of the deal that the Mobile aspect is
unlikely uniquely to resolve the issues,
it will go a long way with key elements
of the protectionist movement within
US government decisionmakers.
As an Airbus spokesperson put it,
“US tariffs for aircraft assembled in
the US and for US carriers? Debatable.
What’s for sure is that it’ll be good forThe Pratt & Whitney PurePower
on the Bombardier C Series.
JOHN WALTON