Bombardier in Talks to Sell CSeries Stake to Airbus
October 06 2015 - 7:10PM
Dow Jones News
Bombardier Inc. is in preliminary talks to sell a stake in its
troubled CSeries jet program to Airbus Group SE, according to a
person familiar with the matter.
The talks, first reported by Reuters, come at a time as the
Canadian plane and train maker has burned through cash amid
declining profits and struggles to launch the CSeries, which would
compete with the smaller passenger jet offerings from Airbus and
Boeing Co.
Bombardier is considering a range of strategic initiatives,
including new financing and assets sales, to shore up its balance
sheet. The company has already said it would sell a minority stake
in its train-equipment business.
Bombardier raised about $3 billion in debt and equity earlier
this year. Its stock, which jumped 15% in Toronto trading on
Tuesday, is down 57% year to date.
A CSeries stake sale would enable Bombardier to lean on
financially stronger Airbus to help finance marketing of the
CSeries. Bombardier has been slow to lock in new orders for the
plane in recent months, raising questions about the program's
success.
For Airbus, an equity stake in the CSeries would allow the
European jet maker to share in the revenue generated from sales of
the CSeries jets without incurring the heavy upfront costs to
develop the program.
After many delays, the CSeries 100 is expected to begin flying
commercially in the first half of 2016. Bombardier has touted the
aircraft's fuel efficiency and lower operating costs as key
advantages over rival aircraft. The smaller CSeries 100 model seats
up to 125 passengers, while the CSeries 300 seats up to 160.
Bombardier has said it expects more customers to sign up once it
gets full certification of the jet program, on track to be
completed by the end of the year.
Bombardier is currently in talks to sell the CSeries jet to
United Continental Holdings Inc.'s United Airlines, JetBlue Airways
Corp. and Air Canada, according to the person familiar with the
matter.
Last month, Bombardier said it had booked orders and commitments
for 603 CSeries aircraft, which included firm orders for 243.
Jacquie McNish contributed to this article.
Write to Ben Dummett at ben.dummett@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 06, 2015 18:55 ET (22:55 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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