3 ms·

As a Québécois, I haven't seen much discussion about the effects of diluting Québec's shares in the plane. The article says our new stake is 19%, down from 49%.

As a Québécois, I haven't seen much discussion about the effects of diluting Québec's shares in the plane. The article says our new stake is 19%, down from 49%. I feel we got kind of shafted in the deal, given we bought these shares at a valuation of ~5.5B (for 2.8B) and now Airbus gets a bigger share for free. I don't think this means good news for our investment.

wbl 9y ago
It's not free. Airbus is providing a US manufacturing site, something Quebec couldn't offer and that has value to Bombardier.
- moomin 9y ago
  And their experienced sales team, which will have value globally.
  - reactor4 9y ago
    Plus the supply chain which also have global value when it's time to acquire parts wherever you are located when the plane breaks down (or just need new parts).
ToFundorNot 9y ago
To be fair, the Quebec government made their bed in this deal. The original terms were terrible (over valued, highly favorable to Bombardier in both failure and success). The deal the caisse made with Bombardier, was more aligned with reality. It was highly punitive for failure, and rewarding with success.
sergers 9y ago
I think the options were leading to failure, so complete loss. Or taking loss in share, inturn for long-term gain and short term atleast something than nothing
Patrick_Devine 9y ago
Having a 19% stake in selling 6000 planes (as the article mentions), is worth a lot more than a 49% share in selling 300 planes. Also, Bombardier had to constantly discount the plane and take lower margins just to get airlines to buy, which with Airbus's sales and support network will no longer happen. Plus a lot of the uncertainty of the project has magically gone away. This is a great deal for Québec.
- Joe8Bit 9y ago
  Very valid point, but I'm wondering if 'assembly' does more to the US to avoid the tariffs on the C-series; does that mean there will be less economic benefit for Quebec? For example, by assembly jobs moving to the US. They may gain in value of their acquired shares but they may also lose in terms of wider economic output for their province.
  - Patrick_Devine 9y ago
    It's unlikely that Airbus would switch all manufacturing to the US, so I think Québec is still going to see more jobs generated from building a portion of the 6000 planes than only 300 planes.
  - skgoa 9y ago
    Only final assembly of the planes that are sold to US airlines will be done in Mobile. In the Airbus world, final assembly tends to mean bolting together a relatively low number of finished sections that were produced somewhere else. So a lot of the labor will stay in Canada.
    - dingaling 9y ago
      > In the Airbus world, final assembly tends to mean bolting together a relatively low number of finished sections that were produced somewhere else. Pretty much the same as modern Boeing. Something like 70% of the 787 structure is made abroad but glued together in the USA: http://static1.uk.businessinsider.com/image/58a768badd0895f0288b4818-800-/chart-889.jpg http://static1.uk.businessinsider.com/image/58a768badd0895f0... Australia, Canada, France, Italy, Japan, Korea, Sweden and ( if RR engines chosen ) UK all send their assemblies to Seattle and Charleston. That's without considering avionics and internal systems. Hence the wording 'Country of final assembly' on the onboard safety cards, carefully chosen to obscure origins.

wbl 9y ago

It's not free. Airbus is providing a US manufacturing site, something Quebec couldn't offer and that has value to Bombardier.

moomin 9y ago
And their experienced sales team, which will have value globally.
- reactor4 9y ago
  Plus the supply chain which also have global value when it's time to acquire parts wherever you are located when the plane breaks down (or just need new parts).

ToFundorNot 9y ago

To be fair, the Quebec government made their bed in this deal. The original terms were terrible (over valued, highly favorable to Bombardier in both failure and success). The deal the caisse made with Bombardier, was more aligned with reality. It was highly punitive for failure, and rewarding with success.

sergers 9y ago

I think the options were leading to failure, so complete loss. Or taking loss in share, inturn for long-term gain and short term atleast something than nothing

Patrick_Devine 9y ago

Having a 19% stake in selling 6000 planes (as the article mentions), is worth a lot more than a 49% share in selling 300 planes. Also, Bombardier had to constantly discount the plane and take lower margins just to get airlines to buy, which with Airbus's sales and support network will no longer happen. Plus a lot of the uncertainty of the project has magically gone away. This is a great deal for Québec.

Joe8Bit 9y ago
Very valid point, but I'm wondering if 'assembly' does more to the US to avoid the tariffs on the C-series; does that mean there will be less economic benefit for Quebec? For example, by assembly jobs moving to the US. They may gain in value of their acquired shares but they may also lose in terms of wider economic output for their province.
- Patrick_Devine 9y ago
  It's unlikely that Airbus would switch all manufacturing to the US, so I think Québec is still going to see more jobs generated from building a portion of the 6000 planes than only 300 planes.
- skgoa 9y ago
  Only final assembly of the planes that are sold to US airlines will be done in Mobile. In the Airbus world, final assembly tends to mean bolting together a relatively low number of finished sections that were produced somewhere else. So a lot of the labor will stay in Canada.
  - dingaling 9y ago
    > In the Airbus world, final assembly tends to mean bolting together a relatively low number of finished sections that were produced somewhere else. Pretty much the same as modern Boeing. Something like 70% of the 787 structure is made abroad but glued together in the USA: http://static1.uk.businessinsider.com/image/58a768badd0895f0288b4818-800-/chart-889.jpg http://static1.uk.businessinsider.com/image/58a768badd0895f0... Australia, Canada, France, Italy, Japan, Korea, Sweden and ( if RR engines chosen ) UK all send their assemblies to Seattle and Charleston. That's without considering avionics and internal systems. Hence the wording 'Country of final assembly' on the onboard safety cards, carefully chosen to obscure origins.