Soon after Bombardier Inc announced that it is giving up majority control of CSeries aircraft to Airbus group, the shares soared more than 20% on the Toronto Stock Exchange. It was trading at $2.89 after the announcement was made by the company executives.
The announcement of the partnership between the two major aircraft manufacturers came after the close of markets on Monday. It can be recalled that the United States had announced of 300% preliminary duties on exports of aircrafts after a trade complaint was filed by Boeing.
As per the deal, the headquarters of CSeries along with the main assembly line will continue to stay in the Montreal area and a second line will be established in Alabama at the plant of Airbus Company. This move is likely to avoid duties from the United States. It is also expected to reduce the production cost in future.
Airbus will acquire 50.01% in the CSeries by way of exchanging its access to logistics and sales for the company. The Quebec government will hold 19% and the Bombardier will continue to own 31 percent. However, Airbus can buyout the company completely after 7.5 years, according to the deal.