Yahoo Finance Airbus Returns to the $1 Shop, This Time With Spirit Asset Deal
(Bloomberg) -- Almost seven years after picking up Bombardier Inc.’s troubled C-Series aircraft program for next to nothing, Airbus SE is going discount shopping once more — this time for assets being offloaded by Spirit AeroSystems Inc. for a symbolic $1 price tag.
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The European planemaker will also get a sweetener to the tune of $559 million from Spirit to take on its wing plant in Belfast in North Ireland, as well as factories in Kinston, North Carolina, and St Nazaire in France that supply its A350 widebody model.
The transaction is a side catch in a bigger haul involving arch-rival Boeing Co., which agreed to reintegrate most of Spirit two decades after it was spun out in order to get the contractor under tighter control. The complex three-way agreement was announced early on Monday morning, after months of haggling over which parts will go where in the civil aircraft duopoly.
The assets that Airbus will gain are crucial to its aircraft programs, chiefly the smaller A220 model that was previously the C-Series, as well as the much bigger A350 aircraft. But the businesses are also deeply unprofitable, meaning that Airbus was hesitant to pay anything substantial for them — particularly as Boeing was under pressure to make the deal happen and needed Airbus to go along.
Airbus doesn’t typically make big purchases. The Toulouse, France-based company walked away in March from talks to buy the big data and cybersecurity business being sold by troubled French technology company Atos SE. In 2018, the European planemaker agreed to pay a symbolic one Canadian dollar to acquire 50% of Bombardier’s narrowbody program after the Canadian manufacturer struggled for years to win any major sales with the aircraft.
Since coming into service, the jet has won praise for its fuel-efficient engines and an airy cabin featuring large windows. But under Bombardier, the program was years late and billions over budget, sabotaging the company’s efforts to break into the single-aisle duopoly controlled by Airbus and Boeing.
The A220, which is available in a smaller 100-seat variant as well as the larger -300 version that accommodates as many as 160 passengers, is now built at plants in Mobile, Alabama and in Mirabel, Canada. The jetliner’s biggest operators are Delta Air Lines, Latvia’s Air Baltic and Air France.
Airbus has said it plans to ramp up production of the A220 to 14 a month in 2026, from about six in 2023 as it looks to turn the loss-making program around. In 2020, Airbus paid an additional $591 million to Bombardier to raise its stake to 75%. The remainder is owned by the government of Quebec.
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