Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
Boeing complaint “unprecedented overreach,” says Bombardier
May 30, 2017, © Leeham Co.: “Boeing’s petition…is unprecedented in its overreach.
There have been no…imports and no domestic shipments during the period of investigation. There are no lost sales or revenues. Boeing does not even make a product that competes with the aircraft Bombardier offered in the United and Delta competitions….”
So begins Bombardier’s closing brief in the Boeing complaint before the US International Trade Commission (ITC).
In the tit-for-tat claims, counter-claims and responses in the price dumping case in which Boeing charges Bombardier sold the CS100 to Delta Air Lines for $19.6m, Bombardier and Delta didn’t mince words in refuting the US plane maker.
Boeing’s own words
Bombardier notes that Boeing “denied the viability” of the 110-seat market by abandoning the 737-600 and the 717. There were no sales of the former after 2006, though Boeing didn’t officially drop the airplane until 2012. Boeing discontinued the 717 in 2006.
Bombardier wrote that not only does Boeing not compete in the 100-125 seat sector, it “further [distanced] itself from the target segment of the CSeries” by up gauging the 7 MAX, making it larger than the CS300. Bombardier quotes a Boeing official as saying the revised MAX 7 and the new MAX 8 “bracket our competition,” referring to the Airbus A320.
Bombardier quotes former CEO of Boeing Commercial Airplanes Ray Conner when he said the reason Boeing dropped its price so dramatically on the 737-700s sold to United was to block Bombardier’s sale and check the validation CSeries would have received from a UAL order.
Boeing’s action in the Delta case “appears to reflect a similar strategy,” Bombardier writes.
Not a single lost sale
Boeing didn’t lose a “single” sale, Delta said in its closing brief.
“Because of Boeing’s enviable order backlog, they told Delta they had no significant production slot availability until 2020 for any aircraft in the 737 family.
“Boeing would have the Commission find a reasonable indication of threat of material injury by reason of a sale Boeing was never in the position to make. The ultimate irony is that Boeing actually did make a sale to Delta as part of the acquisition campaign that resulted in the CS100 order.”
“Simply put, the CS100 was the right size (109 seats) and its ‘clean sheet’ design created unmatched efficiencies and compelling operating costs.”
Boeing offered no viable alternative, Delta writes, noting that Boeing instead “attempted solely to block Bombardier” with used E-190s and the Boeing 717. The quantity of the former was insufficient, and Delta couldn’t buy enough on the open market at a price it needed. There were neither the quantity nor the delivery timeline Delta needed for the latter.
Bombardier could offer deliveries beginning in 2018, with a clean-sheet design.
Price off by millions
Delta and Bombardier provided the net contract price to the ITC for review, but didn’t disclose it in the public filings. However, Bombardier wrote that the reported pricing was off by millions of dollars.
Additionally, Delta wrote that price is but a small portion of aircraft operating costs.
“While Boeing argues that ‘acquisition price’ is paramount, the reality is that even the most favorable pricing will have challenges overcoming non-acquisition costs to create a competitive seat or trip cost for the aircraft,” Delta writes. “The price, of course, is a substantial up-front cost, but it will be quickly eclipsed by fuel costs, maintenance and staffing costs. It is total operating costs that ultimately drive the profitability of an aircraft for an airline.”
Developing new planes
Boeing contended in its May 18 testimony before the ITC that Bombardier’s price dumping would deny Boeing the cash needed for research and development for the MAX 7 and for new airplanes. Bombardier waved this away.
Boeing is projected to have $26bn in free cash flow from 2017-2020 from the 737 line alone, Bombardier writes, from which Boeing could develop a new airplane.
Bombardier also attacked subsidies Boeing received. In the European Union case against the US and Boeing, the World Trade Organization determined Boeing received more than $3bn in illegal subsidies.
“In fact, the figure is higher, as this does not take into account the massive $2.2bn export tax credit subsidy that the US had eliminated before the WTO ruling, nor the recent WTO panel ruling that certain Washington state tax measures involved prohibited export subsidies to Boeing,” Bombardier writes.
Segment size
Bombardier and Delta refuted Boeing’s testimony that there is a distinct 100-150 seat sector in which Bombardier’s alleged pricing practices harm Boeing.
Bombardier wrote that under the ITC rules, the 737 must be viewed as a single product line, not one that is divided into sub-sectors as Boeing claimed in its filing.
This is a legal distinction that Bombardier pursue. Throughout development and marketing of the CSeries, Bombardier—and its competitors—segmented the 100-150 sector from the 150-200 seat one, all falling in the more generic “single aisle” category.
For years, Airbus split these sectors in its Global Market Forecast until doing away with the segmentation a few years ago. Boeing never segmented the two sectors (at least in memory) in its Current Market Outlook.
As Delta and Bombardier point out, Boeing markets the 737 under one family branding and as a complimentary set of airplanes.
Old design, no sales
Delta pointed out that the 737 MAX has its design origins in the 1958 737-100 and has undergone 58 revisions since. The point: the entire 737 family is inter-changeable and not distinct at a 150-sest line that Boeing claims in its testimony.
Delta noted Boeing testified it had not sold an airplane in the 100-150 seat segment in the US since 2013. Thus, it had zero percent market share. In predicting a 24% market share in the future, Boeing was not shrinking—as claimed—but growing.
Boeing need to fire that CEO. They’ll end up without any new Delta orders ever again, and get counter sued by Bombardier.
Just following Trumps lead how to wear his new clothes.
MAGA* style is all the rage now in certain circles. 🙂
* Make America Great Again
If the ITC rule in favour of Bombardier/Delta (I hope they do), could the ruling they issue create barriers, precedents etc. that leave Boeing worse off absent this case? Other than the obvious reputational damage.
“Could the ruling they issue create barriers, precedents etc. that leave Boeing worse off absent this case?”
That is an excellent question and I don’t know the answer. But the whole thing now appears to be backfiring on Boeing.
I don’t think that they anticipated at the time of the filing that they would get so much bad publicity for themselves while at the same time giving Bombardier what could turn out to be an extremely beneficial endorsement from the master itself: Boeing!
I am not sure I would consider a blessing from Boeing, well a blessing.
Not particularly masterful as of late.
Boeing not even offering a CS100 alternative makes sense, no?
American and United might scratch their heads on fleet decisions as a result of seeing how Boeing is hurting Delta’s business.
The MC21 does not look to shabby?
“Delta pointed out that the 737 MAX has its design origins in the 1958 737-100.”
The 737 made its first flight in 1967 and entered service in 1968. But it is based on a 1950s design, the 707, which indeed entered service in 1958.
According to Delta, Boeing began design work n the 737-100 in 1958.
Viewed like this it makes more sense. Thanks Scott.
The Boeing 727 was launched in Dec 1960 with 40 orders each from United and Eastern, so design work began before that date.
That was the birth of the ‘Boeing family’, and the 737 should be more properly described as a 727 derivative ( along with same low undercarriage)
That ‘1958 as a design study’ story appears elsewhere , but nothing further happened till-
” Designers Joseph Sutter and Jack Steiner began work on the 737 in November 1964. The original 1964 specification was for a capacity of about 60-85 passengers, an economical operating range of between 100 and 1000 miles and to be able to break even at a 35% load factor. As a result of final design talks with launch customer Lufthansa the capacity was increased to 100, but the range and load factor figures still stand.”
That 1958 design study was a T- tail, so very unlike the current under wing design which was announced in Feb 1965 with Lufthansa as launch customer. The important connection to the 727:
“In fact the 737 had a 60% parts commonality with the 727 which included the doors, leading edge devices, nacelles, cockpit layout, avionics, components and other fittings
http://www.b737.org.uk/history.htm
From the 737 Technical Site (your own link):
In late 1958 Boeing announced a design study for “A twin-engined feeder airliner to complete the family of Boeing passenger jets”. In Feb 1965 the first order was placed and the project went ahead. The 737 has since become the best-selling commercial aircraft in aviation history.
I mentioned the ’58 design study, which was a T tail.
The 1964 design which used a lot of 727 parts was the
beginning of the result we see today and that layout was patented by Boeing -in 1964.
… and that layout was patented by Boeing -in 1964.
Always surprised over the amount of obviousness, “borrowed” IP and/or copy of prior art that can be incorporated into US patents.
The patent was issued in 1966
US Des 206,305 [check google patents], the ‘design’ patent, in spite of the name, only covers ‘how it looks’
More importantly , term was 14 years. I dont know if it was extended but we do know what came as the SA 1,2,3 in the late 70s and was announced as A320 in 1981 ( one of the airlines working with the preliminary designers was Delta !)
Well all the previous twin jets in 1966 were rear engined, so no prior art was involved. [The VFW
of the same time had overwing engines and of course prop twins were all on wing]
Remember these were ‘how it looks’ patents not a fiendishly clever technical solution, of which there are plenty.
The Caravelle layout was patented in US in 1962, but without more research I cant tell if the Hawker Siddeley Trident ( first 3 engined airliner) had a US patent
All the patented stuff seems to show prior art in German WW2 designs. ( quite amusing to see potential acts of “ingenuity” covered for the next forty years. :- )
According to http://newsroom.lufthansagroup.com/fileadmin/data/themen/B737/Bobby-Die-Boeing-737-bei-Lufthansa.pdf
That isn’t wrong ( in the SonicCruiser way of things. Interest was lackluster. Later ( somewhen between 1958 and 1964 🙂 Lufthansa took that up and formed a set of type requirements around it. Voila: 737-100. Official start and first order was from Feb. 1965 Just after DC-9 FF and BAC 1-11 EIS.
Boeing he’s doing the very worst possible publicity on himself. Boeing will be hurt deeply with that stupid war.
That story is watch all over the world, without to much support to Boeing.
Good luck Boeing with your future international sales!
“Bombardier quotes former CEO of Boeing Commercial Airplanes Ray Conner when he said the reason Boeing dropped its price so dramatically on the 737-700s sold to United was to block Bombardier’s sale and check the validation CSeries would have received from a UAL order.”
This quote has been burned into my memory since day one and was the first thing that came to mind when I heard the Boeing claim.
I always thought that this innocent confession from the BCA boss could one day be used against the company.
I was actually taken aback at the time by Conner’s candour. This revealed to me that he was a good guy, for a bad one would know better… 😉
Well I think that is debate (bad guys being smart)
The MAGA guy has pretty well shot himself in the legal foot about 10 times now. Actually I would say he was using a Mini Mac 10 to mill it off.
And this is from the same Boeing company that threatened to move to SC if they did not get what they wanted from the union.
note: This is illegal under US law, not that you can’t do it, you just can’t threaten to as a negotiating tactic.
As the old commercial used to say “From the Mind of Minolta”
No politics, please. This post is about a trade dispute, not Trump.
“Boeing is projected to have $26bn in free cash flow from 2017-2020 from the 737 line alone, Bombardier writes, from which Boeing could develop a new airplane.”
And what is Boeing doing with all this cash? They give it to shareholders!
In the coming years Boeing will have all its eggs in one basket: the 737. And I expect this basket to fall off a cliff some time after mid 2020. Of course with its huge backlog the 737 can still generate important revenues for a number of years, and I don’t really know when this major source of revenue will stop. All I know is that it will stop one day. And Boeing better be prepared!
In my opinion after 2020 Boeing could find it increasingly difficult to reward its shareholders while at the same time developing several new programmes. My reasoning is not accurate and is based on anticipation. Yet I hold this persistent view that revenues will be declining while at the same time R&D expenses will have to go up if Boeing still wants to be able to compete.
I have always thought that Boeing should invest massively, but in a orderly fashion, into R&D programmes that would help it to better compete with Airbus and to preempt Bombardier’s expansion. But instead it is using this good cash to reward investors.
My strategy is this: In good times you invest massively while you have the cash to do so; and in bad times you retreat and wait for the weather to clear. This is exactly what Airbus has been doing for a very long time now. That is why I think Airbus is in a better position today than Boeing is.
Does anyone know the main shareholders of Boeing? So, we could have some idea of those who animate a very bad governance!
And Normand’s point is the one I have made often, they are eating their seed corn.
Neither the C series or the MC-21 would have seen the light of day with a competitive Boeing.
The largest individual shareholders are former executives of Boeing who have relatively tiny holdings
The largest shareholders are institutional investors and mutual funds
Institutions:Capital World Investors with a reported 42,032,629 shares — or 6.86%
Mutual Funds:Washington Mutual Investors Fund 18,930,255 shares — or 3.09%
Investopedia.com
Its not bad governance to return money to shareholders- its essential. Its just a modern fact of commercial life that this is done by both dividends AND share buybacks
Boeing does have a consistent high level of research and development expenditure which has been sufficient to create the 787 and 777X and would be much the same for a new 797 or a 767 derivative.
interestingly, modern and successful tech companies _never_ do share buybacks or pay dividends.
they reinvest in it in themselves, buy startups, and hoard it for operational flexibility. as a result the street recognizes good corporate governance and rewards them with $1000/share prices.
share buybacks are the hallmark of management that has run out of ideas and just wants to pop the value of their options.
interestingly, modern and successful tech companies _never_ do share buybacks or pay dividends.
As an absolute statement, this is nonsense, I’m afraid.
Just for illustrative purposes, Apple is paying dividends and do share buybacks. Say what you will about them but they do qualify as modern and successful.
Also, every single German DAX 30 listed company (with the exception of Deutsche Bank who are going through rough times at the moment) is paying a dividend. That includes the likes of SAP, Daimler, Lufthansa, Volkswagen, Bayer and adidas.
Quite a few rather successful companies there. Big share buybacks are much rarer with those companies, though.
Personally, I’m actually a big fan of dividends (in measure and if the company is doing well enough to afford it), too, as their original idea was to make people invest in a company its future, and the money actually generated by how well the company is doing. As opposed to exclusively simply speculating on share prices going up/down. As we all know, share prices can occasionally be only rooted marginally in reality.
For instance, I bought multiple shares at their IPO – share prices ocassionally stagnated even though the respective companies were doing quite well, so getting a dividend in return for my investment in the companies makes sense to me.
Now – share buybacks are a different story. In general, I wouldn’t disapprove of the concept – if they’re used in measure to buy back at low prices with the intent of consolidating the spread of ownership (with the potential to re-issue the shares later when the stock price is higher).
However, purely as an exercise in giving away money to the shareholders, I think share buybacks are not a great way of spending company money.
Airbus has developed precisely one new model that has been/will be profitable since the A330/340 which were launched in the 80’s. So has Boeing (err, well, let’s agree that the 787 launch/profits was/are a fiasco). Both have launched derivatives in the mid/large widebody and narrowbody market. Airbus/Boeing launched/sold whatever they’ve sold/profited/lost on the A380/748; I don’t care about this model/range (mainly because the market doesn’t either).
I respect that you don’t claim to be a non-partisan Mr. Hammel, but let’s not go overboard with fake new respecting whether one or the other duopoly members have been spending prodigiously on R&D to great effect for the past 30 years. Airbus studied the A350 Mk1, 2, 3, 4, XWB, and finally A339NEO for about 18 years before deciding finally to do it. Boeing has dithered just as much regarding the 757-767 replacement(s).
Airbus studied the A350 Mk1, 2, 3, 4, XWB, and finally A339NEO for about 18 years before deciding finally to do it. Boeing has dithered just as much regarding the 757-767 replacement(s).
Beg your pardon?
The original A350 Mk.I concept (a revamped A330) was presented in 2004.
The A330neo was then sort of pitched in 2012 and eventually launched in 2014. So it took Airbus 10 years from A350 Mk1 to A330neo, nowhere near 18.
And that’s being generous because the A330neo sort of revisits the A350 Mk.I’s general idea of revamping the A330, while keeping precious few of the details originally envisaged. (The A330neo has different engines, different winglets, different materials – no GLARE, for instance – and a different cockpit.)
Around 2000 Airbus looked at a NEO.
https://www.flightglobal.com/news/articles/airbus-has-informal-talks-over-use-of-gp7000-on-gr-69061/
Bit of a question of how you look at it – considering a new engine for a new variant (larger/HGW) with higher thrust requirements hardly six years after the original variant was put into service doesn’t, to me, qualify as considering a NEO. Using the GP7000 would have simply been a means to the end of fulfilling the requirements of a heavier variant. Not part of a revamp of the whole type, which is what A350 Mk.1/NEO/MAX are about.
Even if Airbus have been “slow” to develop, that is largely irrelevant. They’ve not had to be any quicker, because they haven’t really been pushed by Boeing (particularly in the A320/737 market). When they have needed to, for example the 787 vs A350, when Airbus finally decided on a CF airframe they got on with it quite quickly. Once again Airbus have thought about it a little bit and made it just a little bit wider, and made an airframe that’s more favoured by passengers and put on a slightly bigger wing. Airline buyers notice these things. They’ve even thrown in the A330neo for good measure.
Develop or Die. They who develop ever so slightly more quickly prosper. The woeful decline of the 737 is a prime example. Not only have they lost out to Airbus with the A320 (approx 25 years old, “How much warning did Boeing need?”, one asks oneself), they now worrying about Bombardier pinching what’s left.
Personally speaking I think this is largely down to the differing corporate cultures between the US and Europe. In the US, share price is everything, thus profits must be consistently high in the short term. In Europe, they’re much more willing to take a longer term view. This means not firing a load of engineers as soon as one development is done, not having to re-build an engineering team from scratch every time they launch a new airliner, and not worrying about it too much if one development goes slightly awry (e.g. A380) so long as the lessons and tech are re-used on other developments (A350, A320neo, etc). This can be achieved more easily and reliably if the engineering team isn’t constantly fired / re-hired.
Isn’t much of this difference in corporate cultures attributable to the different labour laws that regulate both regions? The labour laws in Europe offer much more protection to the employee than those in the US.
Having said that, Europe does seem to be catching up to the US vis-a-vis outsourcing and to a lesser degree, layoffs. But what is most telling is how few employees are hired directly by the main manufacturers (e.g. Airbus), which makes me believe that sooner or later, they too will have a problem with execution, since all they seem to do is oversight, not actual development and detail design.
With what we have just learned, Bombardier should document this adventure and, if necessary, pursue Boeing before the courts for infringement of free competition. And damaging his reputation.
@texl1649
“I respect that you don’t claim to be a non-partisan Mr. Ham[m]el.”
In fact I do claim to be a non-partisan, while at the same time I recognize that this is very difficult to put in practice some times.
That being said, I have always had a favourable prejudice towards Airbus because it is, or was, the underdog. Still, I try to be as objective as possible because for me nothing is more important than truth, especially in a world where fake news is becoming the new normal.
What I just said about Airbus also applies to Bombardier. But it is much more difficult for me to retain full objectivity in this case because I happen to live 25 miles down the runway where the CS100 made its first flight in 2013. Still, what I say is always based on facts, and when I express a personal opinion I acknowledge it for what it is: my own viewpoint.
When I was young, that is a very long time ago I am afraid, I was like everyone else on this planet, a big partisan of Boeing. But Lockheed had a special place in my heart, for personal reasons. And today the 747 remains my favourite airliner despite the profound admiration I always had for the L-1011. Unfortunately I cannot say the same for the 787, but that’s another story.
I got to know Boeing better when I initiated my current subscription to Aviation Week in 1979. I am a 707/727/737/747 guy and I have never been impressed by the 757/767. And when McDonald-Douglas acquired Boeing in 1997 I started to lose faith. At that time I also saw the 737 and 747 production stop for almost one month because a cowboy was in charge of the New Boeing.
Then came the Sonic Cruiser joke, and later the Dreamliner farce. That did it for me. From then on I was no longer a Boeing partisan. The biggest blow for me was when Boeing moved its headquarters to Chicago. I am not completely ready to admit it yet but when this happened I probably unconsciously moved my own headquarters to Toulouse.
Then I discovered Leeham News and Comment in 2011. That was a real eye opener for me. In the early days there were more Boeing partisans here and they were extremely agressive. Most of them knew very little about Airbus and its history and were full of prejudices. These guys were constantly bashing Airbus and therefore its partisans were always on the defensive. It was ugly some times, but Scott kept it under control. I like it better today. It seems to be more civilized.
The same thing more or less happened with Bombardier. In 2011 most people, on either side of the Atlantic, knew very little about the C Series. So there was a lot of C Series bashing here and it took many years before LNC members started to realize that this was a serious proposition. Then the tone and content of the comments started to change.
Like Airbus before, Bombardier started to gain some credibility, and today I would say most people seem to have a lot of admiration, and even envy, for the C Series. The only thing that was still missing was Boeing’s anointing of Bombardier. But this has since been rectified.
Boeing just can’t be as stupid as they appear to be. Someone must have thought this through. I’m raking my brain to try and work it out. How about a plan to directly compete (or compete at all) with the C series? Trying to prevent it gaining any traction in the meantime? Bombardier don’t have the muscle to be any serious threat even if they had a competing product.
They did think it through, but every time they did so it was only as far as next quarter’s closing share price. Or at least that’s part of what I think has happened.
In a way the overrun and cost of the 787 has been their downfall. I’m sure that had the 787 program gone smoothly they would have been making a ton of cash out of it, and would have been able to launch into a 737 replacement quite quickly. Instead they got suckered into spending what cash they had left (without the shareholders noticing) renewing the 777, which hasn’t sold so well.
Hire/fire doesn’t work so well in the long run.
I’ve stated this before:
The 787 PR and sales success based on “auto-/group- hypnosis”
and a well run “down to earth, state of the art” design process were mutually exclusive.
A viable real world division producing viable products is
no longer necessary to be shark in the shareholder oceans.
( actually only until the “shell” is hollowed out and folds “surprise”.)
Agree something different is going on here, think it its more about sending warning signals to Airbus (and their potential customers)?
Airbus could offer the A321NEO’s at very competitive pricing that could make things really look even more grim for the MAX9/10’s and force Boeing to develop an NSA instead of the “797X”, which seems their priority.
This will leave the door open to Airbus in the MoM market with an A322 and 330-200 Lite which they could theoretically trigger relatively quickly?
The arguments from BBD and Delta seem much stronger than Boeing’s, but in a trade dispute there are many different factors at play.
The strong protectionist bent of the new administration may be an influence in the decision. While the ITC is independent they will surely be wary of becoming the target of any unpleasant tweets.
Boeing may also be trying to frighten off other US purchasers of the jet. It is more than fulfilling its promises and could be an attractive option for many carriers.
Truly disappointed in Boeing management, to crush competition any way they can. Canada has been a loyal customer of Boeing product, civil and military. I guess us airlines will be force-fed 737 and maintain that cozy duopoly they enjoy so much. Airbus Boeing and Embraer are ganging up against the bomber. Should the verdict cripple CSeries market in the US, i sure hope Canada stands and support that great product and remember the Avro…
See my avatar …
What happens in case a Virgin Island company buys CS-100 and leases them to Delta? Do ITC rules also apply to lease deals?
Hello MHalblaub,
Re: “What happens in case a Virgin Island company buys CS-100 and leases them to Delta? Do ITC rules also apply to lease deals?” – that is a question for the lawyers and regulators involved. I suspect that the answer would depend very much on the details of the lease involved, and be disputed by the parties involved; however, note the following excerpt from the US Code, according to which any anti-dumping duties imposed would also apply to ” any leasing arrangement regarding the merchandise that is equivalent to the sale of the merchandise”.
19 U.S. Code § 1673 – Imposition of antidumping duties
If—
(1) the administering authority determines that a class or kind of foreign merchandise is being, or is likely to be, sold in the United States at less than its fair value, and
(2) the Commission determines that—
(A) an industry in the United States—
(i) is materially injured, or
(ii) is threatened with material injury, or
(B) the establishment of an industry in the United States is materially retarded,
by reason of imports of that merchandise or by reason of sales (or the likelihood of sales) of that merchandise for importation,
then there shall be imposed upon such merchandise an antidumping duty, in addition to any other duty imposed, in an amount equal to the amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise. For purposes of this section and section 1673d(b)(1) of this title, a reference to the sale of foreign merchandise includes the entering into of any leasing arrangement regarding the merchandise that is equivalent to the sale of the merchandise.
With this complaint, Boeing ‘has jumped the MD-11’.
I can’t help thinking that future Canadian F-18 purchases are out. Boeing wouldnt have risked losing a probable sale to start this somewhat unlikely trade claim against a not really competitor
“We are continuing our discussions with the U.S. government and we continue to do that,” Sajjan said of talks over the acquisition of the fighter jets. Canada, however, is no longer talking to Boeing officials.
http://ottawacitizen.com/news/national/defence-watch/sajjan-says-boeing-is-not-a-trust-partner-as-super-hornet-dispute-escalate
@MartinA
In fact no one understands what was Boeing’s strategy when they initiated this, starting with Richard Aboulafia. I think it’s the first time in the six years of my participation to LNC that I hear practically no one bringing a credible argument in favour of Boeing on a particular issue.
Instead what we see is Boeing’s best partisans turning against them on this issue. This is really amazing. It seems to be Boeing against the rest of the world. I may sound like I am exaggerating, which happens to me from time to time, but certainly not in this case.
As to the F-18 I always thought that if Canada was to purchase an initial batch of 18 of them as a stopgap measure they would end up buying 65 in the end because that is the quantity they need in total.
My reasoning is that no one else would be able to beat Boeing on price because its competitors are all offering more modern designs that are also more expensive. And since Canada is not at war with anyone, except perhaps the United States, they don’t really need to have the state of the art.
So the risk for Boeing of loosing a potentially big military contract is real. And believe me Canada is quite upset about this because it is all happening in the middle of an open trade war. Of course we are used to be bullied by the Americans, because that is the way they conduct business, but nothing on this scale that I can remember of.
I think most people would agree that Boeing may end up doing more damage to itself than to anyone else. And if we take example from History the United States may also do a lot of damage to its own economy if it wants to stage a trade war against the rest of the world.
Jan has expressed an opinion which mirrors my own,
“The strong protectionist bent of the new administration may be an influence in the decision. While the ITC is independent they will surely be wary of becoming the target of any unpleasant tweets.”
In other words, would Boeing have tried this if another person were in charge in the White House, someone with a less “America First” agenda?