Airbus, Bombardier end talks over CSeries jet investment

Tue Oct 6, 2015 10:07pm EDT
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By Allison Lampert, Andrea Shalal and Tim Hepher

MONTREAL/WASHINGTON/PARIS (Reuters) - Airbus (AIR.PA: Quote) on Tuesday called off talks with Bombardier (BBDb.TO: Quote) over propping up the troubled CSeries jet, leaving the Canadian plane maker facing dwindling options to keep alive its dream of competing in the aerospace big league.

The latest blow to Bombardier, which has been trying to shore up its shrinking cash reserves for months, came after Reuters reported exclusively that Bombardier had made an offer to Airbus.

Both companies acknowledged that talks had taken place. A person familiar with the situation said Airbus had ended the talks shortly after they became public.

Under the proposed tie-up, Airbus would have helped Bombardier complete development of the troubled aircraft in exchange for a controlling stake in the program, effectively ending Bombardier’s independent efforts to break into the lower end of the global airplane market dominated by Airbus and Boeing (BA.N: Quote).

Bombardier is likely to take a strategic pause and regroup after the sudden end to what some executives had seen as a promising possibility, according to one source.

Among the options were reviving contacts with Chinese investors, and potentially Boeing (BA.N: Quote), as well as a renewed drive to sell stakes in the company’s rail and business jet units, the source said.

Boeing enjoys closer relations with Bombardier's arch-rival Embraer (EMBR3.SA: Quote) of Brazil, and is seen as less likely to be interested in any tie-up with Bombardier.

Bombardier shares jumped 13 percent on the Toronto Stock Exchange immediately after Reuters reported the approach, ending the day up 15 percent at C$1.77. The shares are still worth less than a quarter of their value in July 2008, when Bombardier officially launched the CSeries jet.   Continued...

A Bombardier aircraft lands  in Mirabel, Quebec September 16, 2013. REUTERS/Christinne Muschi