Bombardier shares surge on report it approached Airbus to buy CSeries stake

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MONTREAL – Stock in financially strapped Bombardier surged following a news report that the Montreal-based plane maker has approached Airbus to sell a majority stake in its CSeries jet.

The transportation company’s shares (TSX:BBD.B) closed up almost 15 per cent to $1.77 Tuesday on the Toronto Stock Exchange after Reuters reported that the European aircraft builder would help Bombardier complete development of the 110- to 160-seat aircraft in exchange for a controlling stake in the program.

In a statement Tuesday night, Bombardier confirmed that “such discussions occurred,” but said they are “no longer being pursued.”

“Bombardier will continue to explore initiatives such as a potential participation in industry consolidation,” the company said.

Richard Aboulafia of the Teal Group said it would be highly unusual for a seller to approach a potential buyer, especially one that has tried to kill a rival aircraft program.

“It’s either not real or very desperate,” he said in an interview.

The US$5.4-billion CSeries program is billions of dollars over budget and a couple of years late and it hasn’t attracted a new firm order for the plane in more than a year.

So far Bombardier has just 243 firm orders for the CS100 model that is scheduled to be certified this year and enter into service by mid-2016.

Meanwhile, Aboulafia said aerospace manufacturers have unique design philosophies and are loathe to buy other people’s inventions.

“I don’t know of anyone acquiring anybody else’s jetliner and adopting it as their own,” he said, adding that Boeing eventually shed the 717 after acquiring McDonnell Douglas in 1997.

He said a Chinese partner would probably make more sense for Bombardier given its desire to pierce that market for the CSeries, but that it may not have received a receptive response.

Scotiabank analyst Turan Quettawala said this week that Bombardier could need cash by mid-2016 for the larger CS300 and to develop its new Global 7000/8000 business jet if orders don’t improve.

The company is already looking at selling a minority stake in its railway products division.