Bombardier Inc. can start shipping C Series jets to Delta Air Lines Inc. as scheduled after a surprise ruling by a U.S. trade tribunal that said the proposed imports won’t hurt American industry.
U.S. companies and workers aren’t being harmed by sales of 100- to-150-seat aircraft from Canada, the International Trade Commission said Friday. The panel’s ruling blocks a Commerce Department decision last month to impose duties of almost 300 percent.
Friday’s vote deals a blow to Chicago-based Boeing Co., which said Bombardier sold the C Series in the U.S. at less than fair value while benefiting from government subsidies. The decision also opens the door for Bombardier to add new U.S. customers while potentially easing trade tensions with Canada and the U.K., where the company builds wings for the aircraft.
“Today’s decision is a victory for innovation, competition, and the rule of law,” Montreal-based Bombardier said in an emailed statement. “It is also a victory for U.S. airlines and the U.S. traveling public. The C Series is the most innovative and efficient new aircraft in a generation.”
Bombardier surged 16 percent to C$3.56 at 2:50 p.m. in Toronto after climbing as much as 23 percent for the biggest intraday gain in three months. That put the shares at their highest intraday level in three years. Boeing fell less than 1 percent to $341.95.
“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,” the company said.
The ITC vote contrasts with President Donald Trump’s decision this week to slap tariffs on solar panels and imported washing machines on the grounds that they’re harming U.S. industry. That stirred fears that more restrictive trade measures will follow.
The aircraft decision ruling paves the way for Bombardier to begin deliveries of Canadian-built CS100 jets to Delta this year. The U.S. airline threw a lifeline to the slow-selling C Series in 2016 by ordering at least 75 CS100 jets — a deal with a list value of $5.6 billion at the time.
The carrier said it was looking forward to adding the plane to its fleet.
“Delta is pleased by the ITC’s 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 Atlanta-based airline said.
Three months ago, with the jetliner’s access to the U.S. market in doubt, Bombardier turned to a powerful partner: Airbus SE. The European planemaker agreed to take control of the C Series program as part of a deal that is expected to close later this year.
Bombardier also agreed to help fund a second assembly line for the jets in Mobile, Alabama, where Airbus manufactures narrow-body planes. The ITC ruling calls into question the need for that project, which is estimated to cost $300 million.
Boeing, which brought the trade complaint in April, said government subsidies helped Bombardier compete with “absurdly low” prices. Quebec invested $1 billion in 2016 for a minority stake in the C Series. The Canadian government followed last year with a C$372.5 million ($300 million) financing package for two Bombardier jet programs, including the C Series.
Unfair competition threatened the survival of the 737 Max 7, the smallest of Boeing’s upgraded single-aisle jets, the U.S. planemaker said. That plane and the C Series can carry similar passenger loads, depending on how they’re configured. Boeing is in talks about a potential combination with the Canadian company’s top rival, Embraer SA, which sells planes that directly compete with the C Series.
Delta executives insisted the Max 7 was never in the running before the airline picked the C Series. Boeing “simply did not and does not have the right-sized aircraft,” Greg May, Delta’s senior vice president for supply-chain management and fleet strategy, told the panel last month.
Some of Delta’s U.S. peers could be tempted to take a look at the C Series now that the prospect of duties no longer exists.
JetBlue Airways Corp., Spirit Airlines Inc. and Sun Country Airlines — while not Bombardier customers — all wrote to the Commerce Department and the International Trade Commission last year to express support for the Canadian manufacturer. JetBlue has held discussions with Bombardier about the C Series, Bloomberg News reported in 2016.
Deutsche Lufthansa AG’s Swiss International, the C Series launch customer, and Air Baltic have praised the jet for its better-than-advertised fuel burn and overall performance. Bombardier projects passenger jets carrying 100 to 150 passengers will generate about 6,000 orders globally over the next 20 years.
©2018 Bloomberg L.P.
This article was written by Frederic Tomesco, Randall Woods and Sarah McGregor from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to firstname.lastname@example.org.