Airbus buys Bombardier’s share in A220,  now sole owner together with the Government of Quebec

By Bjorn Fehrm

February 13, 2020, © Leeham News in Toulouse: The news this morning that Airbus is now the sole owner of the A220 (75%) together with the Government of Quebec (25%) is good news for the A220 and for Quebec.

Bombardier is a company in trouble and it was forced to try and save cash in the A220 partnership rather than invest in the future. This potential limitation on the A220 program is now resolved. Airbus gets sole responsibility for future plans and it has in the Government of Quebec a partner that will be positive to the growth of the A220 as it means more business for the Quebec aeronautical industry.

A220, a program with a troubled past morph to a program with a promising future

The A220 joint venture was set up with Airbus as the majority owner with 50.01% and Bombardier as a minority partner with 30.9%, the Government of Quebec, which invested $1bn in the program in 2016, held a 19% share.

The Bombardier commitment also contained a program loss coverage of a maximum of $610m until 2021. This loss coverage, though capped, was problematic for cash-strapped Bombardier. Bombardier needs cash to pay off its large debts (to a large extent caused by A220 development costs) rather than spending more money on an A220 that needed investment at its cash-eating production ramp phase.

Airbus today said the A220 will be profitable when the production reaches 150 aircraft per year which, is expected around 2025. Given the burden of the learning curve of a commercial aircraft program, the total cost of launching a new airliner into the market is approximately double the development cost of about $6bn in the case of the A220.

Airbus is a company with a strong balance sheet and Bombardier the reverse, it has a weak balance sheet. This is no good situation in a JV where Airbus’ sales team and its customers realize the potential of the A220 and are prepared to invest to reap the benefits of the program. Latest today a new MOU for 50 A220 to the African carrier, Green Africa, was announced at the Singapore Air show.

Airbus CEO Guillaume Faury said in today’s 2019 year results press conference, “The A220 program is one we want to invest in, it’s a program we believe in.” This underlines the Airbus attitude towards the A220.

With the transfer of the A220 program to Airbus, the program got a parent with the stature and sales force to exploit the potential of the aircraft. Having Bombardier leave the program, which naturally had different objectives/priorities was in the end, a positive.

The Government of Quebec increases its share in the program from 19% to 25%. This happens without further investment. For the Quebec Government to be a supporter of the program and having transparency on business decisions and investments in the Quebec aero industry is positive.

Airbus will also absorb the remaining Bombardier production parts for the A220. Bombardier sold its wing making North Ireland plant to Spirit Aerosystems last year, but is still making the forward fuselage including the cockpit and the aft fuselage at its St Laurent plant in downtown Montreal.

Airbus will now take over this production and organize it in the Airbus structure subsidiary Stelia Aerospace. The production will initially remain in St Laurent but eventually move to the area of the A220 FAL in Mirabel, north-west of Montreal, to there form an integrated production site for the A220.


The winners and losers of this situation are clear. Bombardier took the risk of entering a new plane in the 100 to 150 seat market, with the potential to extend this to 170 seats and then handed the result to Airbus just when it became clear the program had real potential.

The big winners in the CSeries/A220 drama are Airbus and the state of Quebec. The $591m Airbus has agreed to pay for the remaining shares (it paid $1 for the initial 50%) does little to cover the estimated $8bn to $9bn losses of the program to date for Bombardier. Quebec could save all the jobs and will likely grow its aeronautical cluster further.

The stakes are high in the civil airliner business. Don’t enter it unless you have the depth of pocket to see your program through to profitability.

54 Comments on “Airbus buys Bombardier’s share in A220,  now sole owner together with the Government of Quebec

  1. Is it such a great deal for Airbus right now?

    – Quebec gets extra shares for free. They also denied possibility of any more investment into A220
    – BBD was on hook for quite a lot of money, now Airbus will have to pay all development costs. And that’s on top of half a billion payment for BBD share

    I suspect that Airbus would be very happy to milk BBD for several more years. Of course the question is if BBD would be even able to pay, not matter what was in the contract.

    • Airbus is paying 591m for 25% of the shares plus some work programs (A220 and some A330 work).
      Bombardier gets released of having to pay up to 610m in the next years.
      Quebec government (pension investment fund) put in 1 billion in 2016, and will have 25%.

      This values the A220 program between 4-4,8 billion (depending on the value of the A220 and A330 work packages).
      Most likely the deal with Quebec will include an agreed price for when Airbus can buy the remaining 25% (I’d guess 1 billion plus a percentage for each year since the initial investment).

      To say if this is a good deal or not for Airbus depends on if you think the valuation of the program of around 4,5 billion is high or low.
      And if you think Airbus will be able to leverage its current investment of 591m (and most likely 1 billion plus for the remaining 25%, and some expected losses till the program becomes profitable) in a way that exceeds investing the same amount in another Airbus product.

      Personally I think the Airbus CSALP 50,01% deal for 1 dollar was the deal of the decade (last decade that is) and this recent deal expands on that, though obviously not getting a chunk of the program for 1 dollar again.

      • I don’t think Quebec will ever get money for its shares, what it will get is massive investment from Airbus, and the billions in tax revenue over the next 2 decades.

    • Is that an American trait: Always trying to go beyond reasonable? unrefined greediness?
      Only happy when you can have your claws in the white belly of any counterpart?

  2. Airbus has the cashflow of older programs and knows how to reduce cost on the A220 with time with new suppliers and renegotiated contracts with some of the present ones. Bombardier has to be careful if Airbus modifies the A220-100 as a long range ACJ biz-jet or promise to convert older A220’s to biz-jets before LHT jumps at the possibility and sell them for +$100Millions each. That will hurt the biggest Global Express models.

  3. Some have reported this is a billion dollar loss for Quebec

    “Huge LOST for Quebec government. Bombardier received about US$591 million for 33.5% of the CSeries/A220. BUT also included with their 33.5% of the CSeries/A220 is the A220 parts manufacturing at their Ville St-Laurent facility owned entirely by Bombardier, meaning a lower value of their 33.5% ownership since the $US591 is to pay for both, not just the 33.5% of the A220/CSeries. This gives a TOTAL value of the program to LESS than US$1.76 billion. Quebec is ending with 25% of this, or about US$400 million representing a LOST FOR QUEBEC of about/above US$1.1 billion.” – Sylvain Faust

    • If one believes that the A220 will be a success then this is nothing but good news for the province:
      * Yes there is a paper valuation loss today. But the province will not be selling today, it will be selling in the future when the program is a success at a valuation that represents that success and because of todays deal province now owns more of the program than yesterday.
      * AirBus has demonstrated a commitment to the program $591 million now plus the obligation to provide BBD’s 50% of the funding needed to ramp-up the production. That is probably about $300 million. Yes much, much less than the development costs but enough to make it unlikely AirBus is just playing around.
      * The province has been given further assurances regarding existing jobs.
      * It is more likely now that AirBus will give additional work packages to Montreal area firms.

      I think the A220 will be a success and I think that by maximizing their share of the program the province did the right thing.

      If one doubts the A220 will be a success then the province’s looses no matter what so that is not even worth thinking about.

    • That has to be the worst M&A analysis ever made. The sale was priced as such because BBD needed every dollar they could get, not because the program was valued at the price that Airbus paid.

      • does anybody have an idea how much those A330 and A220 supply factories are worth? Remember, it is a package deal. That might mean many things, for example
        Bomb sold the plants for 91 and the shares in the 220 for 500, makes 591 or
        Bomb sold the plants for 591 and the shares in the 220 for 0, makes 591 or even
        Bomb sold the plants for 691 and the shares in the 220 for -100 (yes MINUS 100 in order to get rid of their obligations), makes 591.

        If 50,1% were trade for one single dollar 2 years ago and now Quebec gets 7% for zero, i consider the second or third option more likely than the first.

        • Not to forget that BBD had a liability of about $700mil. So this deal got BBD 591 + 700 mil. = 1.3 bil.

    • Sylvain Faust is not taking into account the up to 610m BBD would have to pay till the end of 2021 to cover losses/investment in the A220 (though covering the losses/investment would increase their share at the expense of Investissement Quebec’s share).

      If you include the 610m they don’t have to pay with the 591m they will recieve you get to 1.2b ( to be exact) that Airbus is “paying” for 25% of the program plus some work programs on the A220 and A330.

      • Officially, in Quebec books, write-off was 600 millions CAD. Where does the US$ 1.1B come from?

  4. From

    “Airbus is in talks with Breeze Air CEO David Neeleman about a substantial increase in range for the aircraft to more than 4,000 nm, which would make U.S. transcontinental and transatlantic missions possible. What is more, airlines such as Air France-KLM have been lobbying Airbus to build an A220-500 – a stretched version of the -300 which would compete with the Boeing 737-8 and its own A320neo. It would offer, as analysts believe, substantially lower unit costs.”

    So Montreal to Toulouse would be possible Bjorn ?

    And as “Airbus Chief Commercial Officer Christian Scherer said recently that such an aircraft was “not a question of if, but when.”” that leaves Airbus with a pre-NSA to replace / run alongside the A320, and allow them to concentrate on A321, and develop NSA when the time is right.

    That really puts the squeeze on Boeing, they are going to have to take a leap, and innovate !

      • It’s the transatlantic capability that I find interesting.

        A handful of European sectors during the day followed by a hop across the pond in the evening… versatile, and cost effective.

        Future Airbus product line; A220-100,300,500 A321NEO, A322 A330-800,900NEO A350-900,1000NEO

        Future Boeing product line; E175,190,195-E2 Max-7,8,9,10 gap? 787-8,9,10NEO 777X-9

    • @JackDak & Bjorn: Boeing must react quickly, doesn’t it? What can Boeing do with Embraer products?

  5. I think Airbus is after substantial A220 opportunities from SouthWest, United and maybe AA. More than 500 aircraft in total, replacing mainly aging 737-700 and A319/A320 fleets.

    It seems the A220/PW1500 has proven it self & has limitted competition. Congratulation to (former) BBD and Pratt.

    Probably major investment is required to boost production & create additional slots.

    A220 deliveries must be up to 20-25 aircraft per month by 2025 to satisfy demand.

    Doing that without full control of the program probably wasn’t feasible.

    I expect sunstantial investment into accelerated A220 program ramp up.

    • @Keesje
      Have you ever made a calculation on the capabilities of a potential A220-500?

      • assume some local strengthening to increase MTOW and an engine PIP you are talking A320 replacement with US transcon range.

    • If you look at how DL has configured its A221s, one thing that jumps out from a pax ex perspective is that you could literally provide F seats on an A225 for no more than 10% above what it costs to provide C+ seats on a B738 or A320ceo.

  6. In order to boost the program and help Airbus reach a decision regarding -500 best thing would be if AirCanada and others start expressing high interest and demand for it….especially after real world trials and operational numbers which are coming in now.

    As far as Bombardier….such a shame to see a giant collapse like this due to its own management issues and catalog of bad decisions. Fact is, opportunity was there to break into the dupoly and technically speaking technical team which Bombardier assembled kicked ass and delivered above and beyond. management and sales people on the other hand….extreme failure..

  7. As the Quebec Government is getting an increase in its share of the A220 program *for free*, it has to be assumed that Bombardier is indirectly paying for this increase. In other words, Bombardier would have gotten more from Airbus for its own share if there was not at the same time a need to increase Quebec’s share without this government paying anything. Certainly, Airbus would not be paying to increase Quebec’s share.

    • I suspect Investissement Quebec agreed to a change of the orignal deal (Airbus has to buy the remaining shares of both BBD and Quebec at “market price” in a couple of years). So maybe they get the 6% to agree with a change in the deal?
      See my presumptions about the deal in a response on the first comment.

  8. The A220 aircraft is a new generation technology platform. It has efficient engines, proven composite structure, latest technology power system, triple redundant flight controls, proven actuator technology, cabin ventilation that is one of the best in the business and a seating arrangement that appears to be a winner with the customer. Let’s congratulate all those who contributed to make this aircraft a success, especially all of the hard working and dedicated people at Bombardier. It was not easy. But it is a win for Canada. It is an aircraft that I will fly with no hesitation. With a transcontinental range, I can see this aircraft doing Montreal- UK/France/Spain/ Caribbean. It has a good future.

  9. The biggest loser is Boeing, they tried so hard to kill this plane and ended up delivering it into the hands of their biggest competitor, and its just hitting its stride as Boeing goes through its biggest crisis in its history and struggles to get its rehashed antique back into service. With a CS500 the 737 MAX 8 will be non-competitive and the A321 is soaring.All this happened under Mullenbergs watch.

    • win/lose vs synergistic approach.
      Airbus took up a new modern product
      while Boeing would have stunted the market by way of removing the most modern design.
      Then a 737 + CSeries portfolio would have had much narrower spread than the Airbus offer A220 + A320, A321.

      • They ought to write a book about the 737Max debacle and title it: “The Men of Boeing,” subtitle: How to Take the Greatest Engineering Company on Earth and Reduce it to Second Rate in Less Than Two Decades.

      • Boeing would have opened a lot of options for NMA with a Cseries acquistion

  10. Quickly & dirty;

    the OEW difference between -100 and -300 is ~2t for 3.7m of fuselage etc.

    Add that extra empty weight to the -300 and take that figure to the latest HGW payload-range diagram.

    I end up around 2900NM with 165 passenger (100kg/pax) assuming a “simple stretch”, no MTOW growth over the -300HGW variant.

    A 2 class configuration similar to A320 but nearly 4t lighter. A220 has very efficient F class, losing 1 seat per row instead of 2 for a 3-3 cabin.

    Complementary to A320, because no cargo capability, less payload- range, no CFM engine choice and A320 cockpit & MRO commonality.

    • Air Canada is using a 12+125=137 seat configuration for the A220-300.
      Add 4 rows for 12+145=157 seats on a A220-500 with an OEW of 39000 kg,
      157 pax plus 2t more empty weight (20 pax) and the A220-300HGW diagram can be used at 177 pax.

      A320neo 2-class has 12+138=150 seats with 44300 kg OEW.
      MAX-8 has 12+150=162 seats with 45070 kg OEW.

      248 kg A220-500
      278 kg MAX-8
      295 kg A320neo

  11. Very surprised that no is asking in the media how the Qc Govt up its ante without a dime, they had to give some consideration to BBD

    • BBD obligations towards Quebec?
      less money from Airbus received
      compensated by +8% in the project
      transferred to Quebec?

      • I think I heard the Québec minister of the Economy, Pierre Fitzgibbon, say that the Government of Québec had been handed some Bombardier shares in the JV in order to bring its participation to 25%.

        Now, why would Bombardier have done this, I don’t really know. Was it a form of payback that was calculated to make sure Québec would not lose any money with the 1G$ it has invested in the JV when time comes in 2026 to cash in?

        Because since the value of the JV was diminished the government needed a higher percentage to break even and possibly even make a small profit when time comes.

        But what was the incentive for Bombardier to give away some shares? Was this part of a larger deal that remains secret for the time being? Was it made against future considerations? Or perhaps it was simply a gesture on the part of Bombardier to say thank you Québec!

        • Normand, I would think the govt cancelled all debt owed to them, and they will never get any reimbursement of any loans, hence minister Fitzgibbons vehemently stating no cash was given for the share and as we know the program will need likely 500MM more in cash so it also may means that Airbus will be lending the money to the CSLP at hefty rate and getting a return
          and nothing is free in life and I do not why would Airbus would give share away. Local media in Quebec have been very soft on this nebulous question!!

  12. Scott,

    am I understanding this correctly?

    Airbus has also bought all the Bombardier facilities related to the A220?

    • @Aero Ninja: “Airbus has also bought all the Bombardier facilities related to the A220?”

      If you are referring to yesterday’s transaction, no they haven’t. What Airbus did yesterday, through its subsidiary Stelia Aerospace, was to acquire various programmes related to the A220 and A330 that are currently carried out in the former Canadair facility in Saint-Laurent.

      Canadair (Saint-Laurent) remains the property of Bombardier and for the next two or three years Stelia will take over the responsibility of the A220 and A330 work performed there until they move to a new facility they will build in Mirabel. Stelia already manufactures the Global 7500 fuselage in Mirabel.

      The A220 work that is currently being carried out in Saint-Laurent is mainly the cockpit, pressure dome and aft fuselage (where the empennage is attached). All this can be viewed in the following videos.

      As for the A330 work, my understanding is that this is an old contract that goes back to the very beginning of the A330/A340 programme. Bombardier was then given the responsibility of the lower fuselage portion, below the cockpit, where the NLG retracts and where the forward avionics bay can be found as well.

      I think the initial contract also involved manufacturing the cabin floor beams. But the whole contract with Airbus (then Aérospatiale in Toulouse) may have evolved since that time however.

  13. Hi Scott, not sure this entirely true, they are taking over the tooling and fabrication of the aft and forward fuse built in saint-laurent for three years and move it to Mirabel afterward, not the site. The site will eventually be demolished and sold for estate development as BBD done 20 years ago with the Cartierville runway behind the current factory and more recently when they sold the down view airport in Toronto and sold the Q400 to longview capital.

  14. There might have been some employment options which are worth significant money in reality.

    The People do pay taxes instead of getting money from the government + attached profit from sales taxes, property tax etc…. other people employed to take care for those working at Airbus. Concerning Quebec wider look at the investment is needed.

  15. The gummint of the People’s State of Quebec having some ownership means political benefits for future military purchases and reducing motivation of Montreal and Quebec to restrict activities.

    And Airbus people already speak French. (A sore subject in the People’s State of Quebec. Albeit Airbus speaks French French, not the Quebecois dialect.)

    • Keith,

      FYI…Written French in Québec/Canada is identical to as you say “French French”….there is a bigger difference between written American English and as you would say “English English”…I don’t snub North Americans because they do not express themselves with the Queen’s English.

      Please stay in your lane…

    • You do realize AirBus is in Toulouse where an Occitan-influenced French is spoken. Quite different from “Standard French”. Accents through France can vary as much as between France and the “colonies”.

      But that aside AirBus like many European multinationals has English as its official company language. So if those from Toulouse can’t understand those from Quebec they can always speak English.

  16. @Jacques B: “Minister Fitzgibbon vehemently stating no cash was given for the share and as we know the program will need likely 500M more in cash.”

    It is understood by everyone that in the coming months more money will have to be invested in the JV to increase production towards 10 aircraft per month. This means that if Québec does not add more money its participation will be further diluted. And it is now clear that it won’t add more money.

    That is probably the reason why Bombardier had to give away some of its shares to Québec so that its ownership percentage would go from 16% to 25% in order to protect its investment; i.e. a larger percentage of a smaller value. In addition to this the payback date was pushed to 2026 when the programme is expected to have increased substantially in value by then.

    All this was to ensure that Québec would get all its money back, and the way the programme is going it may actually make a small profit in the process.

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