European group challenges US rival Boeing by taking stake in Canadian group’s C-Series programme to help it avoid tariffs

This article is more than 2 years old

This article is more than 2 years old

Bombardier has raised hopes of safeguarding 1,000 jobs in Belfast, saying it was confident a deal for Airbus to take a majority stake in the C-Series jet programme would help it avoid punishing US import tariffs.

The two companies hope to circumvent the 300% import tariff by assembling the C-Series passenger jets destined for US customers at Airbus’s factory in Alabama.

Should the deal proceed, the manufacture of wings for the C-Series is expected to remain in Belfast, where 1,000 people are employed on the programme. Bombardier employs a further 3,000 people in Belfast on other projects.

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“Bombardier remains committed to our Northern Ireland operations,” a spokesperson for the company said. “This deal allows us to continue to support the jobs associated with the C-Series in Belfast and gives us more stability.”

The Canadian company’s share price was up by nearly 20% in early trading on the Toronto stock exchange on Tuesday after the announcement of the Airbus deal.

It is the latest twist in a bitter trade row between Bombardier and Boeing, the American aircraft maker which complained that aid from the Canadian and UK governments amounted to illegal subsidy, allowing Bombardier to sell its C-Series jets at “absurdly low” prices in the US.

The complaint was upheld by the US Department of Commerce, which slapped the huge tariff on the Montreal-based company, putting a contract with US airline Delta and the whole C-Series programme at risk.

“Assembly in the US can resolve the issue,” said Alain Bellemare, the chief executive of Bombardier, of the steep import levy in the US, adding that the two companies hoped to finalise the deal within six to 12 months.



However, Boeing warned that its two rivals should “think again” if they believed the deal would allow them to avoid the levy.

Phil Musser, Boeing’s senior vice-president of communications, tweeted:

Phil Musser (@pmusser) If @Airbus and @Bombardier think this deal will get them around the rules....#thinkagain

Boeing added in a separate statement: “This looks like a questionable deal between two heavily state-subsidised competitors to skirt the US government findings. Everyone should play by the same rules for free and fair trade to work.”

Unite, the UK’s largest union, welcomed the partnership between Bombardier and Airbus but cautioned it was not 100% satisfied that jobs in Northern Ireland were secure.

“This news gives us cause to have some hope, but we are far from out of the woods and there is still much work to do to secure Bombardier jobs in Northern Ireland and the rest of the UK,” said Steve Turner, assistant general secretary at Unite with responsibility for aerospace.



“The deal could take a year or so to get through the relevant competition authorities while Boeing in the US is unlikely to sit idly by. During this period there is a danger that tariffs will be imposed and the C-Series will be effectively locked out of aviation’s largest market.”

The business secretary, Greg Clark, said the partnership was “a very big step forward” in safeguarding Bombardier jobs in Belfast.

“Not only has Airbus committed to Belfast being the home of the wing manufacturer for the C-Series, but they are pointing to the possibility of expanding the output and the order book,” he said.

Clark added that he would continue to work with the Canadian government to fight the Boeing complaint.

Under the terms of the new partnership, Airbus would take a 50.1% stake in the C-Series programme. It would leave Bombardier with about 31%, while the financier Investissement Québec would own about 19%.

Boeing complained to US authorities in April that aid received by Bombardier from the Canadian and UK governments amounted to illegal subsidies, allowing it to sell its C-Series jets to the US airline Delta at below cost price.

Delta has placed a $5.6bn (£4.2bn) order for up to 125 of the new aircraft, with delivery due to begin next year.