May 17, 2017 © Leeham Co.: Is Boeing’s complaint against Bombardier over the Delta
Air Lines CSeries deal merely a stalking horse for future action against Airbus?
This is the theory of one person LNC spoke with on the sidelines Tuesday at the annual Airfinance Journal Conference in New York.
Testimony in the Bombardier case begins this week.
Boeing filed the complaint April 27 with the US Department of Commerce and the International Trade Commission. The well-healed, financial aerospace giant alleged that Bombardier sold the CSeries to Delta for less than $20m (a figure BBD denies).
But Boeing’s complaint, which was widely ridiculed among aviation trade press (including this one), may be more of a test case for future action against Airbus than it is about going after Bombardier, says the person at the AFJ conference.
Bombardier, which avoided bankruptcy only through government bailouts at the heart of the Boeing complaint, had revenues of C$16.3bn last year. Boeing had revenues in 2016 of $96.1bn—roughly six times the size.
Poor Boeing. Teeny, tiny Bombardier and its Delta deal for 75 CSeries makes it impossible for Boeing to develop new airplanes and provide a good return for shareholders. At least that’s what Boeing claims in its complaint.
Boeing’s complaint with the US government and the ITC breaks new ground, according to the person at AFJ’s conference. There hasn’t been a similar complaint in the past and the ignorance of the complex issues of launch customer pricing and related issues in the is apparent, he says.
While the World Trade Organization, where Airbus and Boeing traded complaints in cases that continue over 12 years, is used to these and ostensibly is impartial, the ITC and US DOC tends to be biased toward the complaining party, this person says—in this case, Boeing.
Boeing officials are frustrated that the WTO case continues to drag on through appeals. The WTO found Airbus and Boeing guilty of receiving illegal subsidies. Boeing and the US government claim the amounts to Airbus are far more egregious than to Boeing. Thus, they want authority to levy penalties in the case, even though it’s unclear whether it will be against Airbus or another industry.
If Boeing prevails with the US and ITC, then a complaint may follow against Airbus, it’s suggested.
It’s an interesting theory. And one worth watching.