A cautious welcome for Bombardier’s apparent rescue

While  the news about Bombardier is very welcome, a note of caution is also due. Boeing is not taking it lying down. Again, though Bombardier are saying that  a new C-series production line in Alabama means  expansion of   C-series production as a whole,  there are bound to be fears  that  Bombardier/Airbus  may eventually switch some  production  to Alabama  at the expense of  Belfast if sales forecasts don’t materialise. However the Chinese are said to be interested in the project. And Airbus would not have risked its reputation without bullish hopes of success for developing a market niche for this new, smaller passenger aircraft. even though  they have yet to put up any cash.

Ideologically while both pro and anti- Brexiteers will claim victories, the whole controversy is more about planemaker economics than either Trump or Brexit, according to the FT lead.

Nevertheless the result is bound to be seen as an achievement for the European aircraft industry, developed to  forestall  a post-war US monopoly  and nurtured  with extensive government contracts and cooperation between states.  Production in the US would seem to skirt some of the challenges to Bombardier on the grounds that they have been violating both EU and US rules against state aid. But the controversy may not yet be over and the financing of the project looks tricky.

FT EXTRACTS

Airbus chief executive Tom Enders said of the deal: “I have no doubt that our partnership with Bombardier will boost sales and the value of this programme tremendously . . . quite a few potential C-Series customers held back because they were not entirely sure of the future of this programme going forward.” Mr Enders said the two sides began discussing the deal in August, before the US announced two preliminary decisions to levy a total of 300 per cent duties against the C-Series for importation to the US, dramatically increasing its potential cost for US buyers.

While both chief executives said producing planes in Alabama for the US market would allow Bombardier to avoid the imposition of duties. they denied the dispute was the main impetus for the deal. “We are doing this deal not because of this Boeing petition,” said Mr Bellemare. 50.01% Airbus interest in Bombardier’s C-Series Aircraft Limited Partnership .

However, Boeing said: “This looks like a questionable deal between two heavily state-subsidised competitors to skirt the recent findings of the US government. Our position remains that everyone should play by the same rules for free and fair trade to work.”

The venture brings to fruition a transaction first proposed by Bombardier in October 2015, when the Canadian company offered Airbus a stake in the struggling C-Series programme. Bombardier at that point offered Airbus a stake in the narrow-body jet project because it was facing the real prospect of running out of cash.

Brian Walker

Former BBC journalist and manager in Belfast, Manchester and London, Editor Spolight; Political Editor BBC NI; Current Affairs Commissioning editor BBC Radio 4; Editor Political and Parliamentary Programmes, BBC Westminster; former London Editor Belfast Telegraph. Hon Senior Research Fellow, The Constitution Unit, Univ Coll. London