OTTAWA — Bombardier turned to Airbus on Monday to save an airliner that has been surrounded by uncertainty even before it was hit with a potentially crippling trade action by Boeing in the United States.
In an unexpected announcement, Airbus and Bombardier, which is based in Montreal, formed a partnership to make and sell the CSeries airliner. Airbus will hold 50.1 percent of the venture but will not make any payment, future investment in the project, or assume any debt related to the airliner, which has cost more than $5 billion to develop and put into production.
Advertisement
The arrangement gives Bombardier a way to make an end-run around two preliminary trade rulings that, if finalized, would impose tariffs that would more than quadruple the cost of the airliner in the United States, its key market. The two companies said they would move swiftly to open a CSeries assembly line in Mobile, Ala., where Airbus already makes its A320 airliners, that would most likely allow planes made there to avoid the enormous import duties.
Tom Enders, the chief executive of Airbus, and Alain Bellemare, his counterpart at Bombardier, told reporters that the agreement was not related to the trade action brought by Boeing. But they also said that many airlines had shied away from the CSeries because of concerns about the future of the project, which has been troubled by cost overruns and delays, and the future of Bombardier itself.
“It brings certainty to the future of the program,” said Bellemare, who had joined Bombardier from United Technologies with a mandate to get the CSeries project under control. “It brings confidence that the aircraft is here to stay.”
The CSeries received a significant endorsement last year, when Delta Air Lines ordered 75 of the planes, which are slightly smaller than the A320 or Boeing’s 737. Although Boeing did not bid on Delta’s purchase, it undertook a trade action against Bombardier, arguing that loans and investments in the CSeries by the governments of Canada and Quebec would allow the company to sell the planes at artificially low prices. Bombardier has rejected that claim. Noting that Boeing has received assistance from the United States, it called its competitor’s complaint “pure hypocrisy.”
Advertisement
Boeing’s trade action has angered the government of Prime Minister Justin Trudeau, which immediately suspended plans to buy fighter jets from Boeing worth about 6 billion Canadian dollars. The wings of the CSeries are made at a Bombardier factory in Northern Ireland, prompting Theresa May, the British prime minister, to join Trudeau in urging President Trump to ask Boeing to drop its case. But they have not found a receptive audience in Washington.
Wilbur Ross, the secretary of commerce, declined to comment, saying the government did not yet know enough about the new development to determine its impact.
The Commerce Department last month said it would impose preliminary duties of 219.63 percent on the sale price of CSeries planes to offset the subsidies that Bombardier had received. On Oct. 6, it announced an additional 79.82 percent duty for selling the aircraft at an artificially low price.
The Commerce Department will announce final rulings on the duties in December, then the US International Trade Commission will uphold or overturn the tariffs early next year.
In a statement, Boeing called the announcement “a questionable deal between two heavily state-subsidized competitors to skirt the recent findings of the US government.”
Advertisement
“Our position remains that everyone should play by the same rules for free and fair trade to work,” the company said.
The assembly line in Alabama may solve Bombardier’s tariff problem with the CSeries, but it could raise political tensions in Quebec, which had bailed out the program through an investment of about 1 billion Canadian dollars. But Bellemare said that the sales power of Airbus should mean that far more CSeries airplanes will be produced, which will guarantee — and possibly expand — employment at the factory northwest of Montreal that now builds the plane.