Airbus spends $300 million on new Alabama plant for A220 jet

MOBILE, Al. (Reuters) – Airbus expanded its industrial presence in the United States on Wednesday, preparing to breaking ground on a new assembly plant for the A220, 18 months after agreeing to buy the Canadian jetliner in the midst of a U.S.-Ottawa trade row.

The European planemaker said it would invest $300 million and create 400 jobs in the new facility, to be built in the port city of Mobile alongside an existing assembly line for its best-selling A320 passenger jet, which already employs 700 people.

It said Alabama would provide an unspecified amount in state incentives to support the development.

Airbus plans to use the site to assemble the 110-130-seat A220 for U.S. airlines, who have ordered some 250 of the planes including 135 since Airbus took control last July.

Airbus’s decision to place some output in the United States was initially seen as a trade boost for Canada after Boeing (NYSE:) accused its developer Bombardier of dumping the foreign-made jet at low-ball prices to win a deal with Delta Air Lines (NYSE:).

Although Boeing ultimately lost its trade case, Airbus said it still made sense to serve U.S. demand from the Alabama site.

“The United States is one of the largest markets for us and this is our largest industrial base in the U.S. We have the skills and employees and it is the logical thing to do,” Airbus Americas CEO Jeff Knittel said.

Airbus plans to build 4 A220s a month in Alabama with the first jet to be delivered in 2020. The Montreal base where the aircraft was developed is running at some 2.75 A220 jets a month with plans to raise capacity to 10 a month by the mid-2020s.

The Alabama production line for the larger A320, which opened in 2015, produces 4.5 aircraft a month and this could rise to 5 a month by the end of the year, Knittel said.

(This story has been refiled to include title of Airbus Americas CEO in paragraph 7)

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