Airbus, Quebec Fueling A220 Program with Fresh $1.2 Billion Investment

Airbus and Quebec have agreed to pump $1.2 billion into Airbus Canada to accelerate production of the A220 jetliner, which also is assembled in Alabama.

The news, reported over the weekend, underscores the fact that while industry projections for the A220 program are good, it several years away from profitability. Increases in production, which were slowed by the COVID-19 pandemic, are necessary for the program to turn the corner.

Quebec’s history of investing in the program goes back to the days when it was a clean-sheet Bombardier development program known as the C-Series. While Bombardier successfully developed the new jetliners, widely regarded as an advanced design with a promising future, the vast cost of doing so hampered the company’s ability to successfully produce and market it. That opened the door for Airbus to take a majority interest in the program in 2018. Airbus rebranded the jets as the Airbus A220 family and built a second plant to assemble it in Mobile, joining the original site in Mirabel, Quebec, Canada.

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In 2020 Bombardier sold its remaining interest to Airbus, leaving Airbus holding 75% of the program and the Quebec government owning 25%. The province’s investment has been a bit of a political football over the years, and the latest investment seems to be no exception.

Airbus will inject $900 million into the program, with Quebec putting in $300 million — an investment it hopes to recoup in a few years.

Aviation Week quoted Airbus CEO Guillaume Faury as saying that “The A220 has a strong order book, with nearly 500 aircraft to be delivered over the next few years” and that “As the majority shareholder of the program, Airbus continues to invest in the partnership and Quebec to accelerate the monthly production rate of the A220 aircraft to ensure the anticipated success of the program in the middle of the decade.”

Airbus is producing around five or six A220s per month and aiming for 14 per month in a few years. Production is higher in Mirabel than in Mobile. In October, Airbus officials said the A220 Final Assembly Line in Mobile was producing more than one jet per month, with a near-term goal of two per month and a longer-term goal of four per month in a few years.

Airbus has been pushing to secure lower prices on A220 components, Reuters has reported, but achieving the efficiency of higher production is essential. A Reuters report quoted Faury as saying, “We need volume to have these savings.”

The Montreal Gazette reported that the latest round of Canadian investment had not come without backlash. It quoted Renaud Brossard, head of the Canadian Taxpayers Federation, as saying, “If the risk of losing $1.3 billion is too great, surely adding an extra $385 million to the pot is worse. The government needs to stop putting more money into a project that has already cost Quebecers far too much.”

Officials offered two counter-arguments. Quebec Economy Minister Pierre Fitzgibbon said the deal “would help maintain the equivalent of 2,500 jobs,” for one, according to Reuters.

The second is that the deal sets a date, now pushed back to 2030, when Quebec expects Airbus to buy out its stake. The Montreal Gazette quoted Fitzgibbon as saying that the deal ultimately will be a moneymaker for the province.

“We’re going to be bought back in 2030 at the market value, which should be very high,” Fitzgibbon said. “We should get back the US$300 million, the US$1 billion and some profits. If we hadn’t reinvested, the government’s holding in the A220 would have been practically eliminated, and the odds of earning a return on our investment would have been almost non-existent.”

“An aviation program is something that must be judged over 20 or 25 years,” said Faury, as reported by the Montreal Gazette. “This program is already a success, and it will become a financial success. We’re very happy with how things are going.”

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