Airbus takes control of Bombardier CSeries in rebuff to US threat
Updated 18 October 2017
Reuters
MONTREAL/TOULOUSE: Airbus has agreed to take a majority stake in Bombardier’s troubled CSeries jetliner program, securing the plane’s future and giving the Canadian firm a possible way out of a damaging trade dispute with Boeing.
Shares in Bombardier leapt more than 20 percent on Tuesday after news of the deal with Europe’s biggest aerospace group.
Airbus will get a 50.01 percent stake in an entity recently carved out of Bombardier to produce and market the CSeries, four years after it first flew with a goal to enter the $125 billion a year market for large jets.
But in a move emblematic of the huge risks of aerospace competition, Bombardier will get just one dollar for the majority stake in exchange for Airbus’s purchasing and marketing power to support an aircraft that has won fans for its fuel efficiency but few recent orders due to doubts over its future.
In reality, the terms of the deal mean Bombardier could pay Airbus to take over by agreeing to underwrite $700 million of risks related to cost overruns in coming years.
“It’s an unexpected move by Airbus but indicates they see good market potential for the CSeries. Neither they nor Boeing currently offer an aircraft in the regional jet market,” said aerospace consultant John Strickland of JLS Consulting.
Airbus shares rose around 5 percent.
The deal is similar to one that Airbus walked away from in 2015 when it decided the investment in a plane that had not yet entered service was too risky — with one major difference: that some of the jets will be produced in the United States.
That could change the power balance in Bombardier’s costly trade dispute with Boeing, though it is not the main reason why the two former rivals have come together, executives said.
The US Commerce Department has threatened a possible 300 percent duty on CSeries jet imports after backing Boeing’s complaint that Bombardier received illegal subsidies and dumped the planes at low prices.
The deal with Airbus now means CSeries jets can be built at Airbus’ Alabama assembly plant, which according to the two companies would exempt them from import duties.
“Assembly in the US can resolve the (tariff) issue because it then becomes a domestic product,” Bombardier’s chief executive, Alain Bellemare, told reporters at Airbus’s headquarters in Toulouse.
Airbus CEO Tom Enders hailed the tie-up as “a win for Canada ... a win for the UK,” referring to Bombardier’s wing-making factory in Northern Ireland whose future had been threatened by the distant trade war.
He said it would also create new US jobs.
The deal appeared to catch Boeing off guard. Locked in a separate 13-year trade dispute with Airbus, Boeing called it a “questionable deal” between two of its subsidized competitors.
Bellemare said he hoped the deal would be approved within 6-12 months. Canadian Innovation Minister Navdeep Bains, who must officially decide whether to green-light the deal, said it looked like “Bombardier’s new proposed partnership ... would help position the CSeries for success.”
Bombardier, which had not secured a new order in 18 months for the 110-130 seat plane, said the partnership should more than double the value of the CSeries program.
While it will lose control of a project developed at a cost of $6 billion, the deal gives the CSeries improved economies of scale and a better sales network.
For Airbus, the deal strengthens the bottom end of its narrowbody portfolio after poor sales of its own A319 model and expands its global footprint, potentially opening up further deals in other sectors in Canada.
Tony Webber, a former chief economist at Qantas, said the CSeries could complement Airbus’s existing single-aisle models.
STRATEGIC DECISION
Bellemare said the deal was expected to close in the second half of 2018.
“We’re doing this deal here not because of this Boeing petition. We are doing this deal because it is the right strategic move for Bombardier,” he said, referring to Boeing’s complaint that the Canadian firm received illegal subsidies and dumped CSeries planes at “absurdly low” prices.
Bombardier said the deal would not result in job losses and would keep the head office in Montreal and unions said the deal would benefit the program.
The Boeing-Bombardier dispute has snowballed into a bigger multilateral trade dispute, with British Prime Minister Theresa May asking US President Donald Trump to intervene to save British jobs.
Bombardier is the largest manufacturing employer in Northern Ireland and May’s Conservatives rely on the support of the small Northern Irish Democratic Unionist Party (DUP) party for their majority in parliament.
Business Secretary Greg Clark said Britain would work closely with the planemakers, while the DUP said the agreement was “incredibly significant news” for Belfast.
Talks for the deal between Airbus and Bombardier first started over dinner at the end of August.
Enders said the deal was different from an earlier round of talks in 2015, when he abruptly ordered an end to negotiations. He said the CSeries’ had since been certified, entered service and was performing well.
Some analysts said the deal could drive Boeing closer together with Brazil’s Embraer, with which it already cooperates.
Under the deal, Bombardier will own about 31 percent of CSeries Aircraft Limited Partnership (CSALP), which manufactures and sells the jets, while Investissement Québec, the investment arm of the province of Quebec, will hold 19 percent.
Bombardier is in the middle of a five-year turnaround plan after considering bankruptcy because of a cash-crunch as it developed multiple planes simultaneously, including the CSeries.
RIYADH: Global investors can find a “safe harbor” in the Gulf Cooperation Council as the bloc’s public-private partnerships pipeline offers “compelling” opportunities, according to a new report.
The latest document from the Future Investment Initiative Institute highlights how economies in the region are currently driving the next wave of PPP growth.
It cites findings from Partnerships Bulletin, which ranks Saudi Arabia as second in the global emerging markets pipeline for PPP projects up to July 2025, and also places Dubai in the top 10.
While that analysis claims the Kingdom has 98 PPP projects either formally published or announced, FII says Saudi Arabia has a further 200 currently awaiting approval.
The findings align with the goals outlined in the Kingdom’s National Privatization Strategy, launched in January, which aims to raise satisfaction levels with public services across 18 target sectors, create tens of thousands of specialized jobs, and exceed 220 PPP contracts by 2030.
The strategy also aims to increase private sector capital investments to more than SR240 billion ($63.99 billion) by 2030.
The FII report says that around 90 percent of FDI into Saudi Arabia now flows into non-oil sectors, from advanced manufacturing and tourism to green energy and digital infrastructure.
“That shift reflects deliberate policy choices to open markets, standardize regulatory frameworks and use public capital to de-risk new value chains,” says the document, adding: “The result is a kind of safe harbor in an otherwise low-growth, high-uncertainty world.”
It continues: “While global FDI has stagnated or declined in many regions, the GCC’s pipeline of planned infrastructure and industrial projects now exceeds $2.5 trillion, according to Boston Consulting Group data, with PPPs playing a central role in structuring and financing them. For global investors searching for yield, diversification and inflation-linked income, this represents a compelling proposition.”
Commenting on the FII Institute report, Sally Menassa, partner at international management consulting firm Arthur D. Little, said PPPs are a strategic necessity for delivering infrastructure at speed and scale, and described Saudi Arabia’s pipeline as a “powerful execution and financing tool.”
She added: “The Kingdom’s PPP momentum must remain focused on impact, value creation and execution excellence. PPPs should not be viewed merely as a funding mechanism, but as a structural tool to enhance infrastructure performance, attract investment and support sustainable economic growth in line with Vision 2030.”
Menassa said that Saudi Arabia’s National Privitization Strategy marks a shift from a project-by-project approach to institutionalization of efforts and value creation.
“By clarifying sector priorities, strengthening project selection criteria, and formalizing governance and investor pathways, the Strategy reduces uncertainty. This clarity enhances investor confidence and improves pipeline quality,” said the Arthur D. Little official.
Sally Menassa, partner at international management consulting firm Arthur D. Little. Supplied.
She added: “PPP and privatization efforts in Saudi Arabia are not about divestment or the state shifting execution to the private sector, it is really about becoming more productive as a nation. It enhances efficiency, raises service standards, mobilizes private and SME participation, and attracts capital.”
Menassa further said that the strategy could help the Kingdom achieve stronger fiscal sustainability and higher private sector GDP contribution, both of which are critical components to accelerate the Kingdom’s economic transformation under Vision 2030.
Vijay Valecha, chief investment officer at Century Financial, believes input from the private sector across all stages, from design to construction and operations, improves the efficiency of project delivery and long-term operations in Saudi Arabia.
“Tighter governance through centralized management at the National Center for Privatization and PPP and a more streamlined process, including template contracts, a clearer regulatory environment, and a transparent pipeline, is likely to improve delivery speed,” said Valecha.
He added: “This means faster delivery of big projects like Red Sea resorts or Neom, with private firms handling operations to drive innovation. Ultimately, the strategy supercharges diversification by making the private sector the main engine of growth, aligning perfectly with Saudi Arabia’s push for a vibrant, non-oil economy.”
The FII Institute added that the global flow of FDI is increasingly concentrated in the Gulf Cooperation Council region, driven by ambitious national transformation agendas and deep pools of sovereign wealth.
Tony Hallside, CEO of STP Partners, outlined several factors that are boosting the PPP landscape in the region, which include large infrastructure demand from Vision-level programs and urbanization.
“Government frameworks that standardise PPP procurement are making projects bankable. Strong regional capital pools and sovereign support will mitigate risk and attract global players. In the GCC, Saudi Arabia’s pipeline itself is one of the largest in the Middle East, indicating strong investor interest,” added Hallside.
Underscoring the role of growing PPP in Saudi Arabia, the FII report said: “A decade ago, the Kingdom’s solar capacity was negligible, despite its vast solar resource. Through early anchor investments, long-term power purchase agreements and support for national champions, the state seeded a competitive renewables market that now attracts global players on purely commercial terms.”
Valecha said that clearer PPP laws, standardised contracts and dedicated PPP units have reduced execution risks and made projects more bankable for global infrastructure funds and developers in the GCC region.
He added that rapid urbanization, a young and growing population, rising data center power demand and energy transition projects create predictable, long-duration cash flows in the region.
“This combination of policy support, fiscal necessity and structural growth is why the GCC is emerging as one of the fastest-growing PPP markets globally,” said Valecha.
Vijay Valecha, chief investment officer at Century Financial. Supplied
Key Saudi PPP projects
Yanbu 4 Independent Water Project - supplying water to Medina and Makkah
Location Yanbu, Red Sea coast
Companies involved: Engie, Mowah, Nesma, Saudi Water Partnership Co.
Cost: $826.5 million
Expected delivery date: Operational as of 2024
Hadda Independent Sewage Treatment Plant
Location: Makkah Province
Companies involved: Metito Utilities, Etihad Water and Electricity, SkyBridge Limited Co., Saudi Water Partnership Co.
Expected delivery date: 2028
As Sufun Solar PV Independent Power Project
Location: Hail region
Companies involved: TotalEnergies, Aljomaih Energy & Water, Saudi Power Procurement Co.
Expected delivery date: Expected to connect to the grid in 2027
Construction of greenfield international airports
Location: Taif, Abha, Qassim, and Hail
Companies involved: Currently in the planning stage; investors are being sought
One-Stop Station Project
Location: Intercity road network across the Kingdom
Companies involved: Saudi Arabia’s Roads General Authority and National Center for Privatization & Public-Private Partnership announced a full list of qualified bidders in February.
King Salman Park
Location: Riyadh
Companies involved: King Salman Park Foundation, Ajdan Real Estate, Sedco Capital
Cost: $1 billion
Project: Madinah-3, Buraydah-2, and Tabuk-2 Independent Sewage Treatment Plants
Location: Madinah, Buraydah, and Tabuk
Companies involved: Acciona Agua, Tawzea, Tamasuk, Saudi Water Partnership Co.
Cost: $627 million combined
Riyadh Metro Line 2 Extension
Location: Riyadh
Companies involved: Royal Commission for Riyadh City, Arriyadh New Mobility Consortium, led by Webuild. Riyadh Metro Transit Consultants (JV between US Parsons and France’s Egis and Systra) as project management and construction supervision consultant.
Cost: Up to $900 million
Expected delivery date: 2032
The crucial role of emerging markets
According to the FII Institute report, the ability to deliver resilient infrastructure, expand digital connectivity and accelerate the energy transition will increasingly depend on the strength and legitimacy of PPPs, as fiscal space tightens and investment needs rise.
FII estimates a $5 trillion global infrastructure financing gap by 2040. It also points to significant regional shortfalls, including an estimated $3.7 trillion gap in the US and an annual $130 billion to $170 billion gap across Africa. In this context, PPPs are moving from a transactional procurement route to a central model for financing and delivery.
The report highlighted that emerging markets, including Saudi Arabia, are currently driving the next wave of PPP growth, with spending across low-and middle-income countries reaching $100.7 billion in 2024, up 16 percent year on year, according to figures from the World Bank.
Moreover, emerging markets now represent around 61 percent of global PPP activity by gross domestic product share.
According to Partnerships Bulletin’s findings up to July 31 2025, the Philippines leads the emerging-market pipeline with 230 projects, followed by Saudi Arabia with 98, Kyrgyzstan with 80, Bangladesh with 71, and Peru with 54 projects.
Greece has 42 projects in the pipeline, followed by Dubai at 28, Kenya at 25, Colombia at 24, and Pakistan at 14.
PPP: An engine of growth
When capital was cheap, PPPs were often treated as an optional extra – a way to shift specific projects off the public balance sheet, or to import private-sector efficiency into construction and operations, the FII report said.
However, now, nations consider PPPs as a central hub of their economic strategy, as they enable the state to stretch every dollar of public investment using private capital, while retaining strategic control over what gets built, where and to what standard.
“The real differentiator is complexity. When a project presents significant financial uncertainty or unpredictable demand, or if there’s a high level of climate exposure or technological risk, a PPP can give leaders the tools to manage those issues without slowing things down,” said Bob Willen, global managing partner and chairman of Kearney, said in the FII report.
Erik Ringvold, chief business development officer at Regional Voluntary Carbon Market Co., was quoted in the report as saying that carbon markets will benefit through PPPs, as deepened public-private partnerships could help achieve progress toward national emissions targets, while simultaneously creating economic opportunity and catalyzing new green industries.
“Saudi Arabia has made large strides toward an emissions compliance system, with an operational carbon standard in place, and an emissions trading system announced to be launched over the coming few years,” said Ringvold.
He added: “At VCM, we see a clear future carbon vision for Saudi Arabia. One ecosystem. One marketplace. One iconic collaboration – with the PPP model at the heart of its success.”
PPPs for investors and citizens
For investors, infrastructure-backed PPPs offer long-duration, often inflation-linked cash flows at a time when public markets are volatile and dominated by a narrow set of mega-cap technology stocks.
For citizens, well-designed PPPs can mean better services, more resilient infrastructure and faster progress toward climate and development goals, without unsustainable tax rises or austerity.
FII, however, cautioned that public consent is becoming decisive. Across seven countries, only 23 percent of citizens agree that PPPs “equally benefit everyone”, compared with 41 percent of business and government leaders.
Tony Hallside, CEO of STP Partners. Supplied
Hallside said that public consent hinges on transparency, accountability, and visible service outcomes.
He added that governments should publish clear procurement frameworks, communicate cost-benefit and performance expectations in plain language, and measure user satisfaction and service quality over time — “reinforcing that PPPs deliver tangible improvements in infrastructure and services.”
Menassa echoed similar views and said that communication with the public is not sufficient, but the performance and execution phase holds the key to PPP projects.
“Winning public opinion for PPPs is rather a marathon not a race. It starts with building awareness and trust by providing transparency and demonstrating value for money, ensuring affordability and service quality of public services is maintained through strong regulatory oversight, and ensuring competitive, transparent procurement processes,” added Menassa.
According to the Arthur D. Little official, the public must see tangible improvements in service reliability, efficiency and accountability, and acceptance will follow.
“The world can’t afford to delay the infrastructure and energy transition investments that will determine prosperity – and planetary stability – for decades to come. Nor can it fund them through public budgets alone. Financing the future is, by definition, a joint endeavour,” added the FII report.
