You are here: Home » International » News » Companies
Business Standard

Airbus deal with Bombardier Inc will resolve Boeing trade row: Analysts

The deal with Airbus means CSeries jets can be built at Airbus' Alabama assembly plant

Reuters 

Airbus Bombardier
An Airbus A320neo aircraft and a Bombardier CSeries aircraft are pictured during a news conference to announce a partnership between Airbus and Bombardier on the C Series aircraft programme | Reuters

Bombardier Inc's deal with SE solves a number of problems for the Canadian plane-and-train maker, mostly by making Co's complaints against the company effectively moot, analysts said on Tuesday.

Montreal-based Bombardier said late on Monday it would sell a majority stake in its CSeries jetliner program to as it searches for a way to avoid punitive U.S. tariffs threatened by a trade dispute with

The CSeries jetliners have not secured a new order in 18 months and face a possible 300 percent duty on U.S. imports, after accused Canada of unfairly subsidizing the planes.

The deal with means CSeries jets can be built at Airbus' Alabama assembly plant, potentially circumventing U.S. import duties.

"With the aircraft now having a U.S. domestic production line, the issue around the trade complaint will be moot," analysts at National Bank of Canada said.

Locked in a separate 13-year trade dispute with Airbus, called the sale a "questionable deal" between two of its subsidized competitors.

Other analysts said that by buying a controlling stake of the CSeries jets, will add the full strength of Europe's largest aerospace group to the planes, helping with everything from sales and assembly to customer support.

"Bombardier should enjoy higher sales and lower costs than it would have captured alone," Credit Suisse said.

The Canadian company, which is in the middle of a five-year turnaround plan after facing a cash crunch in 2015, said the partnership should more than double the value of the CSeries program.

For Airbus, buying the troubled line of jetliners allows the company to improve its operational and supply chain lines, which should in turn help in saving production costs, analysts said.

"The CSeries represents a complementary product to the company's existing narrow body aircraft offering, it reduces the competitive threat from a new entrant, and allows it to leverage its existing sales, marketing and support infrastructure," BMO Capital analyst Fadi Chamoun said.

By 1219 GMT, shares were up 3 percent at 79 euros, one of the biggest rises by a European blue-chip stock. shares fell 1.5 percent in premarket trading in New York.

 

(Reporting by Nivedita Bhattacharjee; editing by Patrick Graham)

First Published: Tue, October 17 2017. 19:13 IST
RECOMMENDED FOR YOU