Feds decide Bombardier jets won’t hurt Boeing
WASHINGTON – Delta Air Lines’ plan to import Bombardier’s C Series jets from Canada won’t hurt Boeing, which the Chicago manufacturer had claimed, the U. S. International Trade Commission ruled Friday.
The Commerce Department had threatened tariffs that would have quadrupled the cost of C Series jets that Delta ordered. Boeing had complained that Canada unfairly subsidized Bombardier, which could then sell the jets at prices below cost.
The commission was weighing tariffs geared to offset what an estimated 212.39% subsidy to build the planes and a 79.82% dumping margin that the department determined in December.
But the four-member commission ruled unanimously that « 100- to 150-seat large civil aircraft from Canada do not injure U. S. industry. » Chairman Rhonda Schmidtlein, David Johanson, Irving Williamson and Meredith Broadbent each voted against Boeing.
« The United States International Trade Commission today determined that a U. S. industry is not materially injured or threatened with material injury by reason of imports of 100- to 150-seat large civil aircraft from Canada that the U. S. Department of Commerce has determined are subsidized and sold at less than fair value, » the commission said in a statement.
« As a result of the (commission’s) negative determinations, no anti-dumping or countervailing duty orders will be issued. »
Bombardier issued a statement calling the decision « a victory for innovation, competition, and the rule of law. »
« The C Series is the most innovative and efficient new aircraft in a generation, » the company said. « With this matter behind us, we are moving full speed ahead with finalizing our partnership with Airbus, » which partnered with Bombardier to help manufacture the planes in Alabama.
Boeing vowed to continue to document the damage from “illegal subsidies and dumped pricing.”
“We are disappointed that the International Trade Commission did not recognize the harm that Boeing has suffered from the billions of dollars in illegal government subsidies that the Department of Commerce found Bombardier received and used to dump aircraft in the U. S. small single-aisle airplane market, » Boeing said in a statement. « Those violations have harmed the U. S. aerospace industry, and we are feeling the effects of those unfair business practices in the market every day. »
Delta executives said repeatedly that they wanted the smaller, quieter, fuel-efficient planes, but that they didn’t expect to pay the tariffs.
Delta said Friday it was pleased with the ruling « rejecting Boeing’s anti-competitive attempt to deny U. S. airlines and the U. S. traveling public access to the state-of-the-art 110-seat CS100 aircraft when Boeing offers no viable alternative. » The carrier said it looks forward to introducing the planes to its fleet.
The dispute had threatened a broader trade war. President Trump pulled out of the Trans-Pacific Partnership of 12 nations and threatened to withdraw from the North American Free Trade Agreement. On Tuesday, the administration imposed tariffs on imported solar-energy components and large washing machines.
More on Delta and the Bombardier C Series dispute:
As Delta awaits C Series, the airline’s MD-88s will have to keep flying
Boeing CEO voices confidence in 737 Max against rival C Series planes
Airbus takes majority stake in Bombardier’s C Series program
Delta announced plans last year to buy 75 of the planes with 109 seats each. But Boeing challenged the sale aggressively, arguing that Canada, its province of Quebec, and the United Kingdom subsidized Bombardier with a combined $3 billion to sell planes at less than the cost to produce them.
Boeing said the 737 Max 7, which is now the company’s smallest passenger jet, is roughly comparable starting with 138 seats. Boeing has projected a market for 29,000 narrow-body planes over the next 20 years, and sped up production of the 737.
The perceived threat to Boeing wasn’t so much from the current planes, which are smaller than Boeing’s smallest passenger jet, but from the prospect that Bombardier would develop larger planes to compete against versions of the 737.
Ray Conner, vice chairman of Boeing, told the commission in May that major U. S. airlines like Delta are among the biggest and most respected airlines in the world, which could spur other carriers to buy Bombardier planes.
“They are the true market leaders,” Conner said. “These campaigns help determine whether a new airplane will thrive or die. That’s why Bombardier is willing to lose millions of dollars per plane on this sale.”
But Peter Lichtenbaum, a Covington & Burling lawyer representing Bombardier, argued there were no lost sales or lost revenues for Boeing from the Delta sale.
“Boeing’s petition in this case is unprecedented in its overreach,” Lichtenbaum told the commission. “Boeing doesn’t even make a product that competes with the aircraft Bombardier offered in the sales campaigns that Boeing complains about.”
Another facet of the dispute is that Boeing’s European rival Airbus acquired a majority stake in the C Series program. Airbus planes to build some of the planes at its new factory in Mobile, Ala.
But Boeing has argued that Airbus and Bombardier would import fuselages and wings, and simply assemble them in Alabama.
Airbus CEO Tom Enders tweeted that the company would « carry on with full steam. »
T. Enders: « We are happy to see that the ITC concurred with our views. We will carry on full steam with our C series project, focusing on addressing the needs of our airline customers and creating more and new, high-skill manufacturing jobs in the US. » pic.twitter.com/fX8q31wDLw
The dispute threatened a broader trade war. Canadian Prime Minister Justin Trudeau said he told President Trump in October that the proposed tariff was “not something that is warranted and something we look very negatively upon.” In December, Canada scrapped plans to buy 18 Boeing Super Hornet fight jets.
British Prime Minister Theresa May, who was concerned about losing 4,000 Bombardier jobs in Northern Ireland, warned in September about growing protectionism worldwide.
