Recently, the biggest storyline in the aviation world has been Boeing's (NYSE:BA) successful trade complaint against smaller Canadian rival Bombardier (OTC:BDRBF). In the past month, the U.S. Department of Commerce has determined that Bombardier was "dumping" its CSeries jet in the U.S., and it proposed tariffs totaling 300% on CSeries planes. These tariffs would have effectively made it impossible to sell CSeries planes in the United States.

On Monday, Bombardier flipped the script by striking a deal in which Boeing archrival Airbus (OTC:EADSY) will take a majority stake in the CSeries program. This deal ensures that the CSeries aircraft program will move forward, but its long-term impact will depend on Airbus' strategy for the CSeries platform.

A struggling jet gets a lifeline

Bombardier's CSeries family of small mainline jets offers wider seats than rival planes, lots of overhead bin space, extra-large windows, and other comfort-enhancing features. Meanwhile, the CSeries jets use much less fuel than older planes in that size class (e.g., the Boeing 717), as well as the smallest jets made by Boeing and Airbus today (the 737-700 and A319, respectively).

Nevertheless, the CSeries program has been a commercial failure thus far. As of the end of June -- nearly a decade after sales began -- Bombardier had accumulated just 360 orders for its revolutionary jet. By contrast, Boeing and Airbus are each building more than 500 narrowbody jets annually.

A CS100 jet on the tarmac

Despite their promise, Bombardier's CSeries jets haven't sold well. Image source: Bombardier.

In recent years, slow CSeries sales have become a self-fulfilling prophecy. Many airlines are wary of committing to slow-selling models. For example, without a large base of operators, it can become hard to find replacement parts and qualified maintenance providers. Bombardier's precarious financial position has amplified these concerns by raising the risk that the entire company could fold.

With Airbus becoming the majority owner of the CSeries program, airlines can now be confident that production won't end prematurely. Additionally, the CSeries will now benefit from Airbus' considerable sales and marketing muscle.

A great deal for Airbus

Under the agreement reached on Monday, Airbus will receive a 50.01% stake in the CSeries jet program through the C Series Aircraft Limited Partnership (CSALP) -- and it won't pay a dime. Instead, Airbus will provide a variety of in-kind support to CSALP. Going forward, it will manage sales, marketing, procurement, and customer support for the program.

Additionally, Airbus will set up a CSeries assembly line at its new Mobile, Alabama, factory. This second assembly line will serve the U.S. market, which will almost certainly allow CSeries deliveries in the U.S. to go forward tariff-free. The agreement thus offers a clever way of sidestepping the ongoing trade fight with Boeing.

These in-kind contributions are a low price to pay for getting control of a new, state-of-the-art aircraft program that has already entered production. Furthermore, Airbus will receive call options to buy the remainder of CSALP at fair market value in the future.

What does it mean for the Boeing-Airbus rivalry?

At first glance, this deal may seem like a huge blow to Boeing. Not only has Boeing's effort to kill off the CSeries program apparently failed, but Airbus just picked up a potentially valuable asset in its quest to dominate the massive single-aisle jet market.

The truth is a little more complicated. On the one hand, CSeries sales could finally take off, now that Airbus is overseeing the program. Additionally, by adding the 108-seat CS100 and the 130-seat CS300 to its product lineup, Airbus will have a broader product portfolio than Boeing.

A rendering of an A320neo and a CS100 flying side-by-side

Airbus is adding the CSeries family to its stable of aircraft programs. Image source: Airbus.

On the other hand, Boeing's biggest fear has been that Bombardier would extend the CSeries product line with a 150- to 160-seat CS500 model. This hypothetical product would be a direct competitor to Boeing's 737 MAX 8 -- the best-selling variant of the new MAX family -- and the CS500 would probably have a significant fuel burn advantage. However, a CS500 would also cannibalize Airbus' A320neo. Airbus may not want to commit development money to a plane that will compete directly with one of its best-sellers.

More broadly, if Boeing's goal was to maintain its highly profitable duopoly with Airbus for as long as possible, then it has succeeded. The deal with Airbus will mark the end of Bombardier's push to enter the market for mainline jets. For the time being, airlines that don't want to be stuck with a single aircraft supplier will have to deal with Boeing as well as Airbus.

If Airbus simply promotes the CSeries as an extension to its product lineup, the effect on Boeing could be minimal. After all, the CS100 and CS300 don't compete directly with Boeing's high-volume products. The one big risk for Boeing is that Airbus could decide to develop the CS500 -- even though it might cannibalize the A320neo -- thus threatening Boeing's 737 MAX 8 cash cow.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.