Bombardier scores shocking victory over Boeing in trade dispute involving Delta jets

A rendering of a Bombardier C Series jet in Delta livery.

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A rendering of a Bombardier C Series jet in Delta livery.
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Bombardier

  • The US International Trade Commission on Friday voted in favor of Bombardier in its trade dispute with Boeing over the sale of C Series jets to Delta.
  • The vote effectively nullifies the 299.45% tariff proposed by the Department of Commerce in October.
  • Boeing could appeal the decision in the US court system or take the dispute to the World Trade Organization.

The US International Trade Commission has voted unanimously in favor of Bombardier and against Boeing‘s claim that the Canadian airplane maker’s sale of next-generation C Series airlines to Delta Air Lines unfairly damaged sales of its rival 737-700.

Boeing and Bombardier have been in a trade dispute over the sale of 75 C Series airliners to Delta in 2016. The deal also includes an option for an additional 50 C Series planes.

Boeing filed a complaint with the US Commerce Department in April claiming that its business was harmed when Delta received unnaturally low prices on the Bombardier jets made possible only through Canadian government subsidies.

“The United States International Trade Commission (USITC) 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 (Commerce) has determined are subsidized and sold at less than fair value,” the commission said in an announcement. “As a result of the USITC’s negative determinations, no antidumping or countervailing duty orders will be issued,” it added.

Boeing needed just two of the four ITC commissioners to vote its way to win, while Bombardier needed three. All four voted in favor of Bombardier.

This vote nullifies a 299.45% tariff on US-bound Bombardier C Series jets proposed by the Commerce Department in October.

In a statement to Business Insider, Bombardier said:

“Today’s decision is a victory for innovation, competition, and the rule of law. It is also a victory for US airlines and the US traveling public.

“The C Series is the most innovative and efficient new aircraft in a generation. Its development and production represent thousands of jobs in the United States, Canada, and the United Kingdom. We are extremely proud of our employees, investors, and suppliers who have worked together to bring this remarkable aircraft to the market.

“With this matter behind us, we are moving full speed ahead with finalizing our partnership with Airbus. Integration planning is going well, and we look forward to delivering the C Series to the US market so that US airlines and the US flying public can enjoy the many benefits of this remarkable aircraft.”

Boeing in a statement expressed disappointment that the ITC “did not recognize the harm that Boeing has suffered from the billions of dollars in illegal government subsidies.”

The Chicago-based aviation giant also said it disagreed with the ruling and would continue to document cases of harm to its business by what it said was illegal subsidies and dumping behavior.

Richard Aboulafia, an aviation analyst at Teal Group, said Boeing could still appeal the ITC’s decision in the US court system or at the World Trade Organization.

Bombardier and Delta have argued that the Boeing 737-700 is a significantly larger aircraft than the CS100 jets Delta ordered and thus does not compete in the same market segment and could not harm Boeing.

The CS100 can seat about 100. Boeing has not produced an airliner with 100 to 110 seats since it put the 717-200 and the 737-600 out to pasture more than a decade ago.

Delta, which operates roughly 60% of all 717-200s ever produced, has said a portion of the ordered CS100 jets will go toward replacing older 717s.

Delta’s CEO, Ed Bastian, told Business Insider in a recent interview that Boeing’s counteroffer to Bombardier involved a tranche of 20 second-hand Brazilian Embraer regional jets.

“Delta is pleased by the US International Trade Commission’s ruling rejecting Boeing’s anti-competitive attempt to deny US airlines and the US traveling public access to the state-of-the-art 110-seat CS100 aircraft when Boeing offers no viable alternative,” Delta said in a statement. “The airline looks forward to introducing the innovative CS100 to its fleet for the benefit of Delta’s employees, customers, and shareowners.”

Delta is expected to take delivery of its first C Series jets this spring. The airline’s initial batch of CS100 jets is likely to be based in New York and Los Angeles.

In October, Airbus acquired a majority stake in the C Series program from Bombardier and announced plans to move production of US-bound C Series jets to its plant in Mobile, Alabama, from Canada. It’s unclear how Friday’s ruling will affect those plans.

This story is developing, check back for updates.