Airbus buys majority of C Series

[thirty-30]

http://money.cnn.com/2017/10/16/news/companies/airbus-buys-majority-stake-bombardier-cseries/index.html

I didn't see that coming.

[Selkirk]

A game changer, for sure!


Selkirk

[EZM]

Lol - awesome.

Trump will not be happy with this. It does not help Boeing. Karma.

[Trochu]

I've starting hearing Boeing propaganda on the radio recently, found it amusing.

[Big Grey Wolf]

Nice to see, show Trump two can play the win at all cost game.

[CaberTosser]

Haha, by assembling in Airbus's Alabama factory it becomes a US-made product and not subject to import tariffs. Now Boeing and the US Gov't can take a big chew on a meaty fuselage. :sHa_sarcasticlol:

[bobinthesky]

Canada loses jobs and the US gains jobs. Not much meat in that sausage for Canada.

[Newview01]

Canada loses jobs and the US gains jobs. Not much meat in that sausage for Canada.

Yeah I didn't see the win in this either.

[bobinthesky]

And Bombardier runs of with all the taxpayers money they received for the C-Series program which... they just sold half of. I see no win here for Canada at all, Bombardier wins again though!

[EZM]

Yeah I didn't see the win in this either.

Pretty simple really ....... Some jobs is better than no jobs.

Yes some jobs will ship to the US - but there still will be jobs in Canada as they will continue to participate in selling these aircraft into their largest single market (the US).

With a 300% tariff - that wasn't going to happen and it would have resulted in layoffs in Canada and the potential for insolvency as a company and then nobody has jobs.

My comment relates to Bombardier, the companies who are Canadian based engineering, services and suppliers of their and the people who work there.

This was a positive move.

Some Jobs is better than No Jobs.

[EZM]

And Bombardier runs of with all the taxpayers money they received for the C-Series program which... they just sold half of. I see no win here for Canada at all, Bombardier wins again though!

So it was better to accept the tariff at 300%, in their largest market, and face bankruptcy instead?

They survive and they pay taxes, they employ Canadians both within and outside the company.

The reality of the situation is not as short sighted as the emotional response of "bailing out" a public company "with your taxpayer money".

It's pretty straight forward and not that complicated once you look at the total picture.

[philintheblank]

I've starting hearing Boeing propaganda on the radio recently, found it amusing.

There was a TV commercial the other day listing all the positives that Boeing brings to Canada, with a slogan of " Boeing cares about Canada" or something like that. It was eye roll worthy to say the least.

While it's not ideal to sell a majority stake in something that has taken years to develop and get approvals for, I agree that it makes the most sense. Rather than loose everything and sink the company. I believe the government still owns 14% or something like that in the project, so I would assume that means it will get a piece of the sales going forward.

[Scott h]

Yeah I didn't see the win in this either.

Well the obvious one would be circumventing protectionist tariffs. The less obvious is proving that Trumps policies will have many unforeseen consequences......

[HoytCRX32]

Trump just brought jobs into the US....exactly what he is trying to do.

[chasingtail]

Lol - awesome.

Trump will not be happy with this. It does not help Boeing. Karma.

Why wouldn't he be happy? It will be made in the USA, I say it's a win for Trump.

[bobinthesky]

So it was better to accept the tariff at 300%, in their largest market, and face bankruptcy instead?

They survive and they pay taxes, they employ Canadians both within and outside the company.

The reality of the situation is not as short sighted as the emotional response of "bailing out" a public company "with your taxpayer money".

It's pretty straight forward and not that complicated once you look at the total picture.

You say a few jobs are better than none. So settling for less is fine with you?

Delta says they won't pay the tariff, that will set the precedent and that battle hasn't been fought yet. I'd wager that Delta has just as deep of pockets and connections in Washington as Boeing does. They may garner some support from other airlines as well.
It ain't over until it's over so don't be so short sighted!

[CaberTosser]

Trump just brought jobs into the US....exactly what he is trying to do.

Solid point, though I think there will still be benefit to Canada, we'll get less of the pie, but the pie will also increase in size exponentially. Bombardier and the gov't of Quebec retain their percentage, many parts and the engines are still made in Canada. Increased overall sales might more than offset the % that is allotted to Airbus creating a win/win. I don't know if they would move all final assembly to the USA or concentrate on using that facility only for aircraft destined for US customers and retain Canadian assembly for domestic and other international sales. The wing assemblies are already made somewhere else altogether, I forget exactly where but it may have been Ireland if I recall correctly.

[DiabeticKripple]

meh bombardier should have been out of business years ago.

[wwbirds]

Title I feels falsely states Airbus bought control? It sounds more to me that airbus acquired 51.3% in return for building a factory to assemble the planes in Alabama to avoid the tarif.

Until the full details including share structuring and terms are known it is tough to know what is going on. thought it was funny last night on news when someone said Bombardier gave away the house in order to save the furniture?.

Executives of Bombardier will need more government money from Trudope to give themselves a cash bonus for thinking up this one

[HVA7mm]

I'm guessing that this deal has been in the works for quite awhile, and the media show in the last few weeks has been nothing but political posturing. Trump gets to look like a hero by showing Canada/Trudeau who the boss is, creating more US jobs and "Making America Great Again". Trudeau on the other had, gets to tell the media/Bombardier employees "Hey we did what we could, and it could have been a lot worse", and maybe have Airbus subsidize Bombardier for awhile.

I think the the aerospace industry is just as volatile as oil/gas, and has it's share of feast or famine times depending on the demand for its products. The jobs that are going to be lost to Alabama would have vaporized after the Bombardier contract with Delta was completed anyhow.

Now Alain Bellemare and the rest of the Bombardier executives can dislocate their shoulders patting themselves on the back, and continue to suck on the golden teat.

[EZM]

You say a few jobs are better than none. So settling for less is fine with you?

Delta says they won't pay the tariff, that will set the precedent and that battle hasn't been fought yet. I'd wager that Delta has just as deep of pockets and connections in Washington as Boeing does. They may garner some support from other airlines as well.
It ain't over until it's over so don't be so short sighted!

If the choice is less versus none - yes settling is the better option.

I do hope Delta does fight this silly unfounded Tariff. For Boeing to even release a statement about "unfairly subsidized competitors" when they, themselves, are heavily subsidized is a complete Trumpism - lie and say whatever you want and the crowd cheer "Go 'Merica!!!"what a bunch of clowns.

[EZM]

Title I feels falsely states Airbus bought control? It sounds more to me that airbus acquired 51.3% in return for building a factory to assemble the planes in Alabama to avoid the tarif.

Until the full details including share structuring and terms are known it is tough to know what is going on. thought it was funny last night on news when someone said Bombardier gave away the house in order to save the furniture?.

Executives of Bombardier will need more government money from Trudope to give themselves a cash bonus for thinking up this one

Airbus bought just over half of the "C series" Jet business - not the entire company.

The "C series" business is all that has been sold.

The rest of the company, and it's distinct business units, remain under the same ownership as they were prior to selling of these shares.

[coreya3212]

If Boeing bought anything from bombardier, how much did they pay and where did that money go?

[EZM]

If Boeing bought anything from bombardier, how much did they pay and where did that money go?

Airbus bought a majority position in the C series Jet business not Boeing. (maybe you meant to say Airbus?).

I'm not sure, it's likely in the news somewhere. These are typically shares that were offered for purchase (by Bombardier's C class jet business unit and subsidiary) and subsequently purchased (by Airbus) so the seller of those sold shares is paid.

Sometimes these deals also involve a stock trade - (trade me 3 of your stocks for 5 of mine kinda thing).

Airbus and Boeing, as you are likely aware, are direct competitors in the mid to larger sized commercial jets. My guess is that Bombardier was highly motivated to either sell off these shares (and the liability associated with the damage this tariff would have caused) OR was looking for a way to circumvent the tariff. This deal addresses both motivations.

[EZM]

Just googled the financial details on the deal ...........

Ownership Structure and Agreement Highlights

The C Series programme is operated by CSALP in respect of which Bombardier and IQ respectively hold approximately a 62% and a 38% interest. The Investment Agreement contemplates Airbus acquiring a 50.01% interest in CSALP. Airbus will enter into commercial agreements relating to (i) sales and marketing support services for the C Series, (ii) management of procurement, which will include leading negotiations to improve CSALP level supplier agreements, and (iii) customer support. At closing, there will be no cash contribution by any of the partners, nor will CSALP assume any financial debt. It also contemplates that Bombardier will continue with its current funding plan of CSALP and will fund, if required, the cash shortfalls of CSALP during the first year following the closing up to a maximum amount of US$350 million, and during the second and third years following the closing up to a maximum aggregate amount of US$350 million over both years, in consideration for non-voting participating shares of CSALP with cumulative annual dividends of 2%, with any excess shortfall during such periods to be shared proportionately amongst Class A shareholders.

Airbus will benefit from call rights in respect of all of Bombardier’s interest in CSALP at fair market value, with the amount for non-voting participating shares used by Bombardier capped at the invested amount plus accrued but unpaid dividends, including a call right exercisable no earlier than 7.5 years following the closing, except in the event of certain changes in the control of Bombardier, in which case the right is accelerated. Bombardier will benefit from a corresponding put right whereby it could require that Airbus acquire its interest at fair market value after the expiry of the same period. IQ’s interest is redeemable at fair market value by CSALP, under certain conditions, starting in 2023. IQ will also benefit from tag along rights in connection with a sale by Bombardier of its interest in the partnership.

The Board of Directors of CSALP will initially consist of seven directors, four of whom will be proposed by Airbus, two of whom will be proposed by Bombardier, and one of whom will be proposed by IQ. Airbus will be entitled to name the Chairman of CSALP.

Subject to obtaining the required approval from the Toronto Stock Exchange, the transaction also provides for the issuance to Airbus, upon closing, of warrants exercisable to acquire up to 100,000,000 Class B Shares (subordinate voting) of Bombardier (representing approximately 5% of the aggregate issued and outstanding Class A Shares (multiple voting) and Class B Shares of Bombardier on a fully-diluted basis, and approximately 5% of the aggregate issued and outstanding Class A Shares and Class B Shares on a non-diluted basis), at an exercise price per share equal to the US$ equivalent of C$2.29, which represents the volume-weighted average price of the Class B Shares over the five trading days ending Friday, 13 October 2017. The warrants will have a five-year term from the date of issue, will not be listed and will provide for market standard adjustment provisions, including in the event of corporate changes, stock splits, non-cash dividends, distributions of rights, options or warrants to all or substantially all shareholders or consolidations.

The issuance of the warrants and their terms were negotiated between Bombardier and Airbus at arm’s length and will not materially affect control of Bombardier. Security holder approval will be required under Toronto Stock Exchange rules due to the fact that the warrants will be issued later than 45 days from the date upon which the exercise price was established. Such approval is expected to be obtained by way of written consent of shareholders holding more than 50% of the voting rights attached to all of Bombardier’s issued and outstanding shares.

The transaction has been approved by the Boards of Directors of both Airbus and Bombardier, as well as the Cabinet of the Government of Québec. The transaction remains subject to regulatory approvals, as well as other conditions usual in this type of transaction. There are no guarantees that the transaction will be completed and that the conditions to which it is subject would be met. Completion of the transaction is currently expected for the second half of 2018.

[coreya3212]

Airbus bought a majority position in the C series Jet business not Boeing. (maybe you meant to say Airbus?).

I'm not sure, it's likely in the news somewhere. These are typically shares that were offered for purchase (by Bombardier's C class jet business unit and subsidiary) and subsequently purchased (by Airbus) so the seller of those sold shares is paid.

Sometimes these deals also involve a stock trade - (trade me 3 of your stocks for 5 of mine kinda thing).

Airbus and Boeing, as you are likely aware, are direct competitors in the mid to larger sized commercial jets. My guess is that Bombardier was highly motivated to either sell off these shares (and the liability associated with the damage this tariff would have caused) OR was looking for a way to circumvent the tariff. This deal addresses both motivations.
I did mean Airbus, yes. and you answered where all the cash went from the sale.

[bobinthesky]

If the choice is less versus none - yes settling is the better option.

I do hope Delta does fight this silly unfounded Tariff. For Boeing to even release a statement about "unfairly subsidized competitors" when they, themselves, are heavily subsidized is a complete Trumpism - lie and say whatever you want and the crowd cheer "Go 'Merica!!!"what a bunch of clowns.

With that I totally agree!

[Okotokian]

So let me get this straight... the planes will be made in the Alabama. Trump can declare victory because it's more US jobs. The tariff did what it was designed to do. Airbus and Bombardier will make money. Canadian workers will be laid off, and the Canadian and Quebec governments will have in effect funded much of this. Great.

The two government should call the loans immediately if one Canadian job is lost... but they won't.

Heyyyy... maybe that's the way to save the Canadian oil industry. Give money to Suncor to invest in American production!