Bombardier's Stock Takes Off
October 17 2017 - 12:15PM
Dow Jones News
By Jacquie McNish and Paul Vieira
Bombardier Inc.'s share price soared to its highest level in
more than two years as investors responded to news that Airbus SE
agreed to take control of the company's struggling CSeries jet
family.
The company's Class B stock rose sharply by nearly 19% to C$2.80
($2.24) a share in heavy early-morning trading Tuesday on the
Toronto Stock Exchange. The company's stock price hasn't traded
that high since early 2015.
The market reaction reflects renewed investor confidence in
Bombardier's faltering bet on its CSeries line of narrow-body jets.
The program has been plagued by delays, potentially devastating
U.S. tariff decisions and customer concerns about the financial
health of the Montreal-based transportation company.
Although Airbus isn't investing any money to acquire control of
the CSeries, the French plane maker's financial and marketing
muscle is expected to revive sales of the jets that have stalled
since December. Cameron Doerksen, an analyst with National Bank,
said in a report Tuesday that the partnership will improve
Bombardier's cash flow and lower production costs as it shifts
production for U.S. sales to Airbus's Alabama plant.
Although the move may cost Canadian jobs, one union official
supported the new alliance.
"This was a question of survival," Jerry Dias, president of
Canadian union Unifor, which represents some Bombardier workers,
told Canada's CTV network of the Airbus deal. "Am I thrilled that
they will be building CSeries aircraft in Alabama? No. But
ultimately I don't see that any other decision could be made."
Canadian officials on Monday night said the government had
guarantees from Airbus about CSeries production and employment
levels in Canada and maintaining headquarters in Montreal.
The deal is subject to a foreign-investment review, as
stipulated under Canadian law, but officials signaled that approval
is likely.
Airbus's investment in the CSeries represents "the survival of
the aerospace industry in Canada," said François-Philippe
Champagne, Canadian trade minister and a lawmaker from Quebec.
(END) Dow Jones Newswires
October 17, 2017 12:00 ET (16:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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