Home news Airbus to the rescue – but how will US react?

Airbus to the rescue – but how will US react?

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The 11th-hour rescue of Bombardier’s C-Series project by Airbus – and, make no mistake, a rescue is precisely what it is – raises almost as many questions as it solves.

On the face of it, this is an elegant solution to the crisis into which Bombardier has been plunged by America’s recent decision to impose tariffs on the Canadian company’s C-Series aircraft, which would have effectively quadrupled the cost of the plane for American customers.

By building the aircraft at its vast site in Alabama, opened at a cost of $600m, Airbus will in theory avoid those tariffs.
For Bombardier’s employees, including 4,000 based in Belfast, this also in theory ought to be good news.
They can continue building C-Series aircraft for markets outside the US and, with Airbus’s financial muscle now behind it, look forward to increased orders from elsewhere.
:: Bombardier in Airbus deal amid UK job fears
The reason for all these caveats is because it is impossible to know how the Americans will react.
The first response from Boeing, the US aircraft giant that lobbied Washington for Bombardier to be slapped with these tariffs, is ominous: “This looks like a questionable deal between two heavily-subsidised competitors to skirt the recent findings of the US government.
“Our position remains that everyone should play by the same rules for free and fair trade to work.”

Image: Bombardier’s C-Series aircraft has won plaudits for its fuel efficiency
Given that there have been few greater recipients of corporate welfare than Boeing itself, it is surprising that the Boeing spokesman maintained a straight face as he trotted out this line, but the implication is clear enough.
Boeing – which for the last 13 years has been involved in its own trade dispute with Airbus over subsidies – and its lobbyists will be doing all they can to convince the US commerce department this is an attempt to get around its rules.
To that end, this deal raises the stakes in a growing trade row between the US and Canada, Bombardier’s homeland.
The Canadian government, which gave Bombardier financial assistance to support the C-Series, is in the market for new jet fighters but has said it will not buy any Super Hornets, built by Boeing’s military arm, until the company drops its legal action against Bombardier.
The matter is likely to further poison relations between Washington and Ottawa just as President Trump is seeking to “reform” the North America Free Trade Agreement between the US, Canada and Mexico.

Image: The deal looks a smart move for Airbus
Caught in the cross-fire in all this, of course, are Bombardier’s employees in east Belfast, most of whom are Protestant and who largely vote for the Democratic Unionist Party, whose support is needed by Theresa May’s government to push through votes in the House of Commons.
Mrs May, who has already raised this issue with Mr Trump several times, will be as anxious as anyone to see this matter resolved without there being job losses in Northern Ireland.

Nor will it be lost on the Prime Minister and her colleagues that, while the Trump administration – supposedly a trusted ally that has promised a “beautiful” post-Brexit trade deal with the UK – is threatening the jobs of Belfast workers, Airbus, a pan-European construct born out of co-operation between Britain, France, Germany and Spain, is riding to their rescue.
The Bombardier episode has proved, if there were any doubt, that the Trump administration will always, always, put American interests first.
That is the case even where the jobs of other American workers might be at stake.
They assuredly would be in this instance, as the engines powering the C-Series are built by Pratt & Whitney, an arm of the US manufacturing conglomerate United Technologies.

Image: Boeing called the tie-up a ‘questionable deal’
For Airbus, meanwhile, this looks like smart footwork.
This is the biggest deal in the aircraft manufacturing sector since Boeing acquired McDonnell Douglas 20 years ago and which, without the European company spending a penny, has handed it control of a programme that has cost $6bn.
To that end, it is also a humiliation for Bombardier, whose finances have been precarious for years.
The deal, which comes two years after Airbus walked away from a deal to take a stake in the C-Series, strengthens the position of the European company in the fast-growing market for narrow-bodied aircraft.
The C-Series, which has won plaudits for its fuel efficiency, is smaller than Airbus’s existing A320 family of narrow-bodied jets and so gives the latter an extra market to sell into.
Sales of the C-Series had been hobbled by Bombardier’s small size and resources relative to those of Boeing and Airbus.
The latter’s superior sales and marketing firepower should also breathe new life into the aircraft.
Lufthansa, whose Swiss arm was the launch operator of the C-Series, has already been making encouraging noises in response to the deal.
So, in theory, these should be exciting times for Bombardier’s employees.
The big question is how the US government views this agreement.

Source: Sky News