The encyclopedia · Strategy & Leadership · Strategic decision · 2008–2018
Bombardier spent $6B building the CSeries — then gave it to Airbus for $1
Bombardier spent $6B building the CSeries jet and nearly went bankrupt. In 2018, it sold the majority stake to Airbus for $1.
Bombardier · Airbus · 2018-07
What happened
Bombardier, the Canadian aerospace and rail company, launched the CSeries in 2008 — a clean-sheet, 100–150 seat jet designed to compete with Boeing's 737 and Airbus's A320 families. The CSeries was technically brilliant: advanced materials, geared turbofan engines, and 20% better fuel efficiency than competitors.
Development costs ballooned from $3.4 billion to over $6 billion. The program was three years late. Bombardier's debt soared, and the company came close to bankruptcy. In 2015, the Quebec government invested $1 billion to keep the program alive. Boeing filed a trade complaint alleging illegal subsidies, and the US Commerce Department initially imposed a 300% tariff on CSeries imports.
In October 2017, Bombardier sold a 50.01% majority stake in the CSeries to Airbus for $1. Airbus's involvement neutralized the US tariff threat (the plane would be assembled in Alabama). In July 2018, the CSeries was renamed the Airbus A220. Bombardier, which had spent $6 billion and nearly died building the plane, received $1 for its majority stake. The plane was excellent; the business case was not.
Why it happened
- The $6B development cost was too large for a company with Bombardier's balance sheet; the program consumed the entire company's resources.
- The three-year delay meant the CSeries entered the market after Boeing and Airbus had already launched their re-engined competitors (737 MAX, A320neo).
- Boeing's trade complaint and the 300% tariff threat made the CSeries unsellable in the US market without a partner — Airbus was the only viable buyer.
- Selling 50.01% for $1 was not a negotiation — it was a rescue. Bombardier had no alternative that did not involve bankruptcy.
The lesson
A brilliant product can still destroy its maker. The CSeries was the best plane in its class, and it nearly bankrupted Bombardier. You built your competitor's product.
Aftermath
The Airbus A220 is now one of the best-selling aircraft in its class, with over 300 orders. Bombardier exited commercial aviation entirely, selling its CRJ program to Mitsubishi and its Dash 8 to Viking Air. The company now focuses on business jets (Global and Challenger) and rail. The CSeries/A220 is cited as the definitive example of a great product with a fatal business case.
Sources
- Airbus A220 — Wikipedia (originally Bombardier CSeries; launched 2008; $6B+ development cost; 3 years late; Quebec $1B bailout 2015; Boeing trade complaint; 50.01% sold to Airbus for $1 in 2018; renamed A220)
- CBC News — Bombardier exits the commercial plane business, sells remaining A220 stake to Airbus (2020; confirms $1 controlling stake sale in 2018; Airbus paid $591M for remaining stake; Quebec $1.3B investment; Bombardier exits commercial aviation)
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