Airbus in Advanced Talks to Acquire Bombardier Stake in A220 Program -- Update

By Jacquie McNish and Benjamin Katz 

Airbus SE is in advanced talks to acquire Bombardier Inc.'s remaining stake in the two companies' joint A220 commercial jetliner program, according to people familiar with the matter.

A deal for Bombardier's 34% stake could be reached as early as next week, ahead of both companies' earnings reports, the people said. The Quebec government, which holds a 16% stake in the program, is likely to retain that holding, according to one of these people.

Financial terms of the planned stake sale couldn't be learned. While in an advanced stage, talks could still fall apart, or the contours of the potential deal could change significantly.

The deal, if consummated, would mark a formal end to the Canadian manufacturer's more than decadelong attempt to break Airbus's duopoly with Boeing Co. Bombardier set off to build a narrow-body commercial jet that could compete with the two giant plane makers. However, the plane's development was beset by delays and cost overruns.

Originally called the CSeries, the aircraft was well received by customer airlines, but sales were disappointing, partly because of concerns over the sustainability of the program. Airbus took a 50.01% stake in the CSeries program in July 2018. It paid virtually no cash for the stake but committed to throwing its global marketing heft behind the jet. Bombardier, meanwhile, committed to covering the program's losses over a set period.

Last month, Bombardier said it had started a strategic review of its holding in the aircraft program after the latest financial projections pushed out the forecast for the program reaching break even.

Under the terms of the proposed new stake sale, Airbus would absorb the $350 million in losses that Bombardier was required to cover this year, according to the people familiar with the matter.

The Montreal-based manufacturer formally launched the CSeries in 2008 with the goal of developing an aircraft that could compete with Boeing's 737 MAX and the Airbus A320neo narrow-bodies. But the program had struggled to drum up enough sales in competition with the two global incumbents and faced concern from airlines over the program's financial precariousness.

Write to Jacquie McNish at [e-mail] and Benjamin Katz at [e-mail]

(END) Dow Jones Newswires

February 07, 2020 15:48 ET (20:48 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.