Bombardier loses battle with Boeing

Bombardier loses battle with Boeing

The surge on Tuesday was linked to news that Bombardier is in talks with Chinas three biggest airlines about purchasing the CSeries.

Boeing alleged the CS100 price secured by Delta endangers the future of the 737 MAX 7, the smallest version of the MAX family, although the USA manufacturer acknowledges it did not offer the aircraft to meet Delta's requirement for a 100-110-seat aircraft.

This isn't a case of President Donald Trump trying to boost USA companies at the expense of foreign competitors.

Earlier this year, the department moved to impose new duties on the import of Canadian soft lumber and President Donald Trump has signaled his interest to renegotiate the terms of the North America Free Trade Agreement between the two nations.

Wilbur Ross, the US Commerce Secretary, said in a statement: "The U.S. values its relationships with Canada, but even our closest allies must play by the rules".

But the timing is awkward.

In the strongest diplomatic comments from a minister yet, Defence Secretary Sir Michael Fallon said the aircraft manufacturer's status as a "long-term partner" was now at risk.

If the CSeries deal is dead, it could hurt the US economy as well as Bombardier - more than half of the jet proponents are made by USA -based companies and the manufacturing of the parts supports 22,000 jobs in 17 states.

"In April, Boeing asked the Commerce Department and the United States International Trade Commission to investigate the sale of new C Series planes to Delta Air Lines for a reported $6-billion (U.S.)".

Canadian Foreign Minister Chrystia Freeland said that the government of Canada also strongly disagrees with the US tariff ruling. "What Boeing is really saying here is that Bombardier has an unfair advantage because Canadian taxpayers are covering part of its cost". The US Government believes that exporters received countervailable subsidies of 219.63 percent.

The trade row is over the Montreal-based Bombardier's 100- to 150-seat C-Series passenger jets.

That total is about double the $6.2 billion list price total for 75 Boeing 737-700s, the plane that Boeing had named in its bid for the Delta business.

The largest of Embraer's next-generation commercial jets, the E195-E2, goes head-to-head with Bombardier's CS100.

"Boeing doesn't want them in this market segment competing with them", Doug Irwin, a trade scholar at Dartmouth College, told me. He also once again threatened to cut government ties with Boeing.

The current tariff is preliminary.

A final department ruling is expected in December, followed by a decision by the U.S. International Trade Commission on alleged injury to Boeing in February.

Canadian officials participating in the NAFTA talks criticized the Commerce Department's decision, with Foreign Affairs Minister Chrystia Freeland saying Canada “strongly disagrees” with the United States probes into its aerospace industry.

Theresa May said she was "bitterly disappointed" at the Bombardier decision.

But the consequences could be far more serious than hurt feelings.

Speaking before the ruling, Prime Minister Justin Trudeau promised to continue to stand with Bombardier and Canada's aerospace industry.

Such a plant could open in 2020 or 2021, depending on partnerships that Embraer would look to develop, he said.

Though just a preliminary decision, it upset Canada, the home base of Bombardier and created more pressure for May.