They looked at CS twice and only bought in when it was offered to them for $1. That was a relatively easy decision since BBD was going to be financing the ramp up and only would need to be bought out once the program was far enough along to have a clear vision of its strengths and weaknesses.
All it would be costing Airbus in the tangible sense was $1 and access to its marketing and supply chain operations. The intangible investment was putting Airbus's name on the plane. That helped potential customers feel that Airbus would need to stick with the program whatever came next.
What came next is BBD fading faster than planned due to ongoing trouble in its rail and bizjet divisions. To Airbus this could be an inconvenient situation that is forcing it to put more cash and other resources into the operation than it planned and take more responsibility for the future of the program and be more committed earlier than planned. Or it could mean Airbus is going to gain control sooner than planned and presumably at a better price than planned, merely an escalation of the timeline.
I don't think we have the information needed to tell these two cases apart. Basically BBD's troubles are advancing the timeline on a decision Airbus was going to have to make one way or the other in the future. Airbus may end up sacrificing future flexibility in exchange for a better purchase price.
frmrCapCadet wrote:The 220 is a good plane, we all know that. Whether or not it will be a great seller is still, excuse the phrase, up in the air.
I think we have the evidence to see it is a good seller. We also know many of the early big deals were made when BBD was desperate for sales so we can presume there is little/no profit in them.
What we don't know is what are the projected program break even points assuming the existing structure vs one after BBD sells its share to Airbus. Airbus has been saying it would not invest more in the program till it was economically viable. BBD's troubles are forcing them to make that decision now rather than watching BBD try to carry the program forward. An interesting point is BBD is saying the ramp up is costing more than planned and the partnership has less value than they thought it would.
I think Airbus will justify making the investment to buy BBD's stake but in doing so they are taking on the risk of the program becoming economically viable all on themselves which is something they were saying they were going to avoid. I think this shows confidence the program will eventually be economically viable, but it could also be a small sign that they are already in too deep to pull out.