Allison Lampert

MONTREAL (Reuters), -European Airbus and Quebec have announced a $1.2B deal to invest in Canada’s A220 aircraft program. The agreement would permit the province of Quebec to stay with the A220 plane program, which is currently losing money.

According to a statement, Airbus will invest $900 million in the project, and the Quebec government will contribute $300 million.

It stated that the deal would delay by four years, from 2026 to 2030 the time when Airbus purchases Quebec’s 25% interest in small jetliners.

Before 2025, the program isn’t expected to become profitable.

The 110-130 passenger A220 is a good example of airlines choosing small planes in the wake of the pandemic. However, Airbus still has not been able to get enough low prices on many components for the A220 to make it profitable.

Reuters first reported the news, citing multiple sources.

Raytheon Technologies (NYSE) was originally contracted under Canada’s Bombardier. This company, which had no purchasing power and tried to get into the main jet market, set up contracts with important suppliers. In 2018, Airbus took control.

Airbus had been expected to leverage its worldwide marketing network and greater purchasing power of suppliers to propel the project to the bottom. However, sales have skyrocketed but industry sources claim that Airbus has not won the concessions from suppliers.

Industry sources claimed that the company has received price reductions of around 20% from its key suppliers, but it is trying to get another similar cut.

Airbus’ A220 aircraft is manufactured in Montreal and Mobile, Alabama at two different locations.

Canada’s Bombardier pulled out of the 2020 program after the CSeries was plagued with delays.

Airbus received a 75% interest in A220 and Quebec was awarded the remaining 25%. They also agreed to invest $1Billion in CSeries back 2015, which gave them a 25 percent stake.

The Journal de Montreal reported that talks about an agreement had been held in January.