An employee works on an Airbus A220-300 at the Airbus facility in Mirabel, Que., in February, 2020. Airbus employs 3,500 people in Mirabel at an average salary of $87,500 a year.Christinne Muschi/Reuters
Quebec is pouring yet more money into a manufacturing partnership with Airbus SE on the A220 jet, previously known as the Bombardier C Series, as the European plane giant continues to grapple with supply chain disruptions and labour trouble that are hobbling its aircraft manufacturing globally.
Premier François Legault’s government will add another US$300-million to its existing US$1.3-billion investment in the limited partnership while Airbus commits another US$900-million, the partners said during a news conference Tuesday. The money is needed to speed up the production rate of the aircraft at the Airbus factory north of Montreal in Mirabel to achieve profitability, the company said.
It’s the second time the province has pumped in additional funds since taking an initial US$1-billion equity stake in the plane program, with the previous US$300-million injection coming in early 2022. Analysts warned additional public money might be needed beyond what was announced Tuesday, but Mr. Legault and Economy Minister Pierre Fitzgibbon said they believe the current funding should be sufficient for Airbus to execute its production hike.
“I want to be part of the game” and participate in the plane’s success, Mr. Legault said when asked why more public money should be plowed into the endeavour. Airbus employs 3,500 people in Mirabel at an average salary of $87,500 a year and it’s a key pillar in Quebec’s aerospace cluster, he said.
Quebec has written off the value of the initial US$1-billion investment, but Mr. Fitzgibbon said the government is “very comfortable” that it’ll get back the two most recent injections while generating significant benefits for the economy as the A220 program matures. If it had decided not to invest, its stake would have been diluted over time, he said.
Under the reworked pact, Quebec will remain a shareholder in the venture for an additional five years to 2035, according to the information provided. Airbus previously had a right to buy out Quebec’s share in 2030.
The province also won a guarantee from Airbus that two-thirds of the jobs related to the A220 program would be located in Quebec, Mr. Legault said. In addition to the plant in Mirabel, the jet is also assembled in Mobile, Ala.
The A220, a single-aisle plane seating 100 to 150 people, is the former C Series airliner developed by Bombardier Inc. BBD-B-T at a cost of more than US$6-billion. It was the biggest research and development effort in Bombardier history, a nearly two-decades-long push funded in part by public money with the aim to put Bombardier at the cutting edge of global passenger-jet manufacturing.
The plane was two years late to market and US$2-billion over budget, and it nearly dragged Bombardier into ruin. After searching for a partner to help fund the venture, the Montreal-based plane maker turned to Airbus in 2018, handing over control for a nominal fee.
Quebec, which had invested US$1-billion in the program to help Bombardier avoid a financial collapse, held a 16-per-cent stake when Airbus took control and later boosted its share to 25 per cent. Airbus owns the other 75 per cent.
Airline customers have praised the A220 for its fuel efficiency and other features, and Airbus currently enjoys an order book of about 900 jetliners sold. Some 340 have been shipped and are in service at carriers that include Air Canada, Air France and Delta Air Lines.
But the program remains a money-losing proposition from a manufacturing perspective.
Airbus is aiming to double A220 output to 14 units a month within two years from the current seven in order to achieve profitability and move through the learning curve that comes with building an all-new jet.
The European plane maker is struggling with supplier and labour issues, which have persisted since the COVID-19 crisis. Airbus executives in recent weeks have blamed bottlenecks in airframe components, cabin materials and engines for the delays in getting aircraft out the hangar and into its customers’ hands.
At Mirabel, the company’s confidence is buoyed by the hiring of 1,600 new workers and new plant infrastructure, such as a flight test centre, which will help it reach the production target, said Benoît Schultz, chief executive of Airbus Canada LP. He said Airbus has also dispatched teams to its suppliers in order to better anticipate issues and resolve them.
“In an industrial program like this there are always difficulties and it’s our job to manage them,” Mr. Schultz said. “We’re learning to operate in an environment that, since the pandemic, is more and more volatile and unstable. But we’re progressing. We’re doing the right things.”
In making the new investment, Quebec is betting that it’s better to spend money to buy more time than to cut its losses now. But it’s also putting a lot of faith in Airbus that the company can solve its supplier issues, said John Gradek, a faculty lecturer and co-ordinator of a program on aviation and supply chain management at McGill University.
“Quebec is playing the long game on this one,” Mr. Gradek said, adding that the sums committed to date might not be enough to achieve the kind of stable production needed to break even. “I think that by playing that long game, the chequebook might have to get written up once again. This is not over.”
Editor’s note: This article has been revised from an earlier version, to remove inaccurate information about the current book value of Quebec’s stake in Bombardier.