Airbus’ surprise move to acquire Bombardier’s CSeries airplane program has left Boeing feeling dizzy. The acquisition has given Airbus a ready small-jet business which would have otherwise taken years to materialize. The deal was announced on Monday and gave Airbus control of Bombardier’s freshly introduced small narrowbody jets like the 110-seat CS100 and the 130-seat CS300. The deal has shaped up the small jet segment of the aviation industry forcing Boeing back to the drawing board.
When Boeing unveiled the narrowbody 737 Dreamliner, the company said they have cleared up the competition till 2030. But the recent CSeries jets have a potential
Boeing has said it doesn’t expect to have to field a so-called “clean-sheet” new-technology design to replace the Renton-built 737 narrowbody until around 2030. The CSeries jets can seat up to 150 passengers and match the 737 MAX 8 which seats 162 passengers. With competition matching up soon, Boeing might have to look for new options to the 737. The recent acquisition brings the problems earlier for Boeing. The competition which the company expected to arrive decades from now looks to be arriving in another couple of years.
The deal is a quick acquisition type. Airbus will get immediate and complete control of Bombardier as soon as the deal closes in the coming year. The four directors of the seven will be from Airbus while Bombardier will have two directors and the final one would be from the government of Quebec. However this only a temporary management arrangement and is likely to change in the coming five to six years. Airbus will buy out the 19 percent shares that are currently owned by Quebec government in the CSeries of jets produced by Bombardier. After this, the company is further looking to buy out the remaining 31 shares are currently left and still owned by Bombardier. So ultimately if all goes well, Airbus will become the sole owner of CSeries and Bombardier by 2026.
Meanwhile, Boeing has said that it has no fear of the deal. The company has claimed that even though Airbus and Bombardier have joined hands, they are still way behind Boeing. The deal is unlikely to have any immediate impact on the trades in the USA. The tariffs imposed would get quadruple due to the deal and the production of planes and other components will get delayed. For instance, Delta Airlines will have to wait for its 75 airplanes which was earlier expected to get started by spring 2018. Airbus has stated that it will be upgrading the A321s along with the launch of new CSeries 500 jets.
It looks a very tricky situation in the coming month for Boeing. The aviation giant has to work out on sales and business strategies to muscle its way against rising competitions. The company also has to think of new ideas to outclass the latest acquisition and deal between Airbus and Bombardier.
Jeffrey is acting editor in chief of AmazingNews24 with over seven years of experience in the field of online news under his belt. Jeffrey has worked with multiple media houses and is currently leading a team of journalists, sub-editors and writers through his entrepreneurial endeavours.
