AIRBUS and the government of Quebec will invest as much as US$1.2 billion to ramp up production of the narrow-body A220 passenger jet, buying more time to try to make the aircraft profitable.
The European aerospace firm expects to be responsible for up to US$900 million, in proportion to its 75 per cent stake in the jet programme.
Airbus has the A220 that will not be profitable until 2026, a projection that depends on the manufacturer’s ability to raise output to 14 jets a month between its factories in Mirabel, Quebec, and Mobile, Alabama. But the plane has a strong order book, with a backlog of 560 orders as at the end of June.
For Quebec, Canada’s second-most populous province, the commitment to invest another US$300 million would bring its total outlay in the A220 to more than C$2 billion (S$2 billion).
Quebec initially invested US$1 billion in 2015 for a 49.5 per cent stake in the jet when it was owned by Bombardier. Three years later, Airbus took control of the A220 programme, but it has been a consistent money-loser and needed new injections of capital.
The province’s stake is now 25 per cent.
As part of the agreement, Airbus and Quebec will extend their partnership to 2035. Previously, it was structured so that Airbus would be able to buy out Quebec’s minority stake in 2030. The government is betting on a better return if it gives Airbus more time to turn a profit from the A220, the French-language news site said. BLOOMBERG
