November 30, 2018
The Most Valuable
Information Free To All

Boeing Seeks U.S. Anti-Dumping Probe Against Bombardier Jet

By David Lawder and Alwyn Scott

WASHINGTON/NEW YORK - Boeing Co <BA.N> on Thursday asked the U.S. Commerce Department to investigate alleged subsidies and unfair pricing for Canadian planemaker Bombardier's <BBDb.TO> new CSeries airplane, adding to growing trade tensions between the United States and Canada.

The petition against Canada's new competitor to the Boeing 737 aircraft came just days after the Commerce Department imposed duties averaging 20 percent on Canadian softwood lumber, saying that its origin from public land amounted to an unfair government subsidy.

On Wednesday, U.S. President Donald Trump told Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto that he intended to begin renegotiating the 23-year-old North American Free Trade Agreement, after White House officials said Trump had been considering an order to withdraw from the pact.

Boeing said in its petition that Bombardier, determined to win a key order from Delta Air Lines Inc <DAL.N> after losing a competition at United Airlines <UAL.N>, had offered its planes to the airline at an "absurdly low" $19.6 million each, well below what it described as the aircraft’s production cost of $33.2 million.

"Propelled by massive, supply creating and illegal government subsidies, Bombardier Inc has embarked on an aggressive campaign to dump its CSeries aircraft in the United States," Boeing said in its petition.

Boeing's similarly sized 737-700 model has a list price of $83.4 million, with the new 737-MAX 7 priced at $92.2 million. Sales discounts from list prices are typically 40 percent to 50 percent in the industry.

In April 2016, Bombardier won the Delta order, its biggest yet, for 75 CS100 jets, worth an estimated $5.6 billion based on the list price of about $71.8 million.

In its complaint against Bombardier, Boeing argued that the CSeries program would not exist without hundreds of millions of dollars in launch aid from the governments of Canada, Quebec and Britain, nor a $2.5 billion equity infusion from Quebec in 2015.

Boeing also took a shot at European rival Airbus, which it accuses of benefiting from similar "unfair" government subsidies in a long-running dispute before the World Trade Organization.

Bombardier is “taking a page out of the Airbus strategy book” by trying to muscle into the U.S. market with cut-rate pricing, Boeing charged.

A Commerce Department spokesman said the petition would be given "a thorough review" and further comment was premature.

Commerce Secretary Wilbur Ross has taken swift action in recent weeks to protect the U.S. steel and aluminum industries from foreign competition, launching national security investigations that could lead to import restrictions.

An investigation could lead to duties on the aircraft to offset any below-cost pricing or any subsidies deemed unfair.

In a statement, Canada's government objected to Boeing's allegations and noted that the CSeries has many U.S. suppliers, including for engines, and supports thousands of U.S. jobs.

"The Government of Canada will mount a vigorous defense against these allegations and stand up for aerospace jobs on both sides of the border," it said in the statement.

Bombardier’s chief executive conceded the company had been “aggressive” on pricing in order to win, and sources familiar with the deal pegged the discount closer to two-thirds off the nominal list price.

Bombardier said in a statement that it was reviewing the petition and structures its dealings to ensure compliance with all relevant laws.

The request for anti-dumping measures was also addressed to the U.S. International Trade Commission, an independent U.S. trade body that will review any decisions by the Commerce Department.


(Additional reporting by Tim Hepher in Paris, David Ljunggren in Ottawa and Allison Lampert in Montreal; writing by David Lawder; editing by Jonathan Oatis and Bill Rigby)

Related Posts