May 23, 2017, © Leeham Co.: Delta Air Lines shot down Boeing’s claim that Bombardier “dumped” the CSeries order, in testimony last week before the US International Trade Commission.
Boeing filed a complaint April 27 that Bombardier sold the CS100 to Delta for $19.6m, well below its production cost, a price that constitutes “dumping.”
Boeing seeks tariffs of nearly 80% on the importation of the airplanes to Delta.
Boeing’s complaint is that the Delta deal made it impossible for Boeing to offer the 737-700 at a competitive price.
Delta testified, however, that Boeing didn’t offer the 737, either the -700 NG model or the new MAX 7.
Boeing said it didn’t offer the airplanes because it knew from the contest between Bombardier, Boeing and Embraer at United Airlines, that it could not meet the price point Delta wants.
However, given the 737 backlog–all the way out through 2020–it’s unclear that Boeing had any delivery slots to offer Delta.
“I want to be clear that Boeing is not competing for new orders when we were negotiating with Bombardier,” testified Greg May, SVP of Supply Chain Management and Fleet Strategy. “Boeing had no viable competitive alternatives to the CS100. We were not even considering any new Boeing product as an alternative when we made the purchase that Boeing challenges in the petition.”
May testified that the 737-700 is larger than then CS100 Delta ordered, in a different airplane category.
“I can’t emphasize enough…the 737-700 is not a 100- to 110-seat aircraft,” he said.
May testified that Boeing offered a combination of used aircraft, the Embraer E-190 and Boeing 717s. The 717s weren’t available on the timeline Delta wanted. Delta purchased the E-190s, only to decide afterwards to sell the aircraft itself.
“While we were negotiating with Boeing for used E-190s, they never offered us any new Boeing-produced planes as alternative to our needs,” May said. “They couldn’t because they do not produce a plane in the 100 to 110-seat gauge.”
May also said that the 737-700 is used by Delta in a special performance role, but is otherwise uneconomical. Delta has just 10, all ordered in 1997 and delivered in 2008-2009.