Sept. 26, 2017, © Leeham Co.: The decision was expected, but the tariff was a shocker. The US Department of Commerce levied a 219% tariff on Bombardier’s CS100 sale to Delta Air Lines after Boeing filed a complaint about price dumping and illegal subsidies.
Boeing asked for a 79% tariff on countervailing duties and the same on anti-price dumping. The latter preliminary decision is due Oct. 4. It was expected to be the same as the countervaling duty.
The Commerce Department press release is below.
U.S. DEPARTMENT OF COMMERCE ISSUES AFFIRMATIVE PRELIMINARY COUNTERVAILING DUTY DETERMINATION ON IMPORTS OF 100- TO 150-SEAT LARGE CIVIL AIRCRAFT FROM CANADA
WASHINGTON – Today, U.S. Secretary of Commerce Wilbur Ross announced the affirmative preliminary determination in the countervailing duty (CVD) investigation of 100- to 150-seat large civil aircraft from Canada, finding that exporters of this merchandise received countervailable subsidies of 219.63 percent.
The Commerce Department will instruct U.S. Customs and Border Protection to collect cash deposits from importers of 100- to 150-seat large civil aircraft based on these preliminary rates.
“The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” said Secretary Ross. “The subsidization of goods by foreign governments is something that the Trump Administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination.”
Although Canadian civil aircraft subject to this investigation have not yet been imported, an April 2016 press release announcing the sale of Canadian civil aircraft to a U.S. airline valued the order to be in excess of $5 billion.
The petitioner is The Boeing Company (IL).
Enforcement of U.S. trade law is a prime focus of the Trump administration. From January 20 through September 20, 2017, the Commerce Department has initiated 65 Antidumping (AD) and CVD investigations – a 48 percent increase from the previous year. For the same time period in 2016, The Commerce Department had initiated 44 antidumping and countervailing duty investigations.
The Commerce Department currently maintains 411 AD and CVD duty orders which provide relief to American companies and industries impacted by unfair trade. CVD laws provide U.S. businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of unfair subsidization of imports into the United States.
Unless the final determination is aligned with the concurrent antidumping duty investigation, Commerce is currently scheduled to announce its final CVD determination in this investigation on December 12, 2017.
If the Commerce Department makes an affirmative final determination of subsidization and the U.S. International Trade Commission (ITC) makes an affirmative final injury determination, Commerce will issue a CVD order. If the Commerce Department makes a negative final determination of subsidization or the ITC makes a negative final determination of injury, the investigation will be terminated and no order will be issued.
Click HERE for a fact sheet on today’s decision.
The U.S. Department of Commerce’s Enforcement and Compliance unit within the International Trade Administration is responsible for vigorously enforcing U.S. trade laws and does so through an impartial, transparent process that abides by international rules and is based solely on factual evidence.
Imports from companies that receive unfair subsidies from their governments in the form of grants, loans, equity infusions, tax breaks and production inputs are subject to “countervailing duties” aimed at directly countering those subsidies.
In fiscal year 2016, the United States collected $1.5 billion in duties on $14 billion of imported goods found to be underpriced, or subsidized by foreign governments.
Boeing Statement RE: Commerce Duty Determination on Bombardier Subsidies
Sept. 26, 2017
“The U.S. Department of Commerce today affirmed that Bombardier has taken massive illegal subsidies in violation of existing trade law. As a result of this finding, Commerce announced a preliminary determination of a countervailing duty of 219.63% that will be imposed on each Bombardier C-Series aircraft imported into the United States. Subsidies enabled Bombardier to dump its product into the U.S. market, harming aerospace workers in the United States and throughout Boeing’s global supply chain. Early next month, Commerce is expected to confirm the magnitude of the illegal dumping and announce additional duties associated with that finding.
“Global trade works only if everyone plays by the rules that we’ve all endorsed to ensure fair competition, as adjudicated by independent national and international bodies. This dispute has nothing to do with limiting innovation or competition, which we welcome. Rather, it has everything to do with maintaining a level playing field and ensuring that aerospace companies abide by trade agreements.
“The process that will continue to play out over the next several months at the International Trade Commission and Commerce is the longstanding, transparent course for examining and addressing situations where products are ‘dumped’ into the United States at below-cost prices for the purposes of gaining market share. We have full confidence that this will continue to be a fair and fact-based investigation, and we look forward to its conclusion early next year.”
Boeing in Canada: “Boeing has a proven and enduring commitment to Canada. We’ve been doing business in Canada since 1919 and contribute approximately $4 billion (Canadian) annually to Canada’s economic growth and development. We employ about 2,000 people in Canada and support an additional 15,500 jobs through our supplier network of more than 560 Canadian companies operating coast to coast. We value Canada as a customer and supplier-partner for both our commercial and defense businesses. Boeing contributes nearly 14% of the total economic impact driven by the Canadian aerospace industry, and our spending in Canada is growing at around 8% every year, ahead of both the Canadian economy generally and Canadian aerospace industry in particular.”
Boeing in the UK: “Boeing and the UK will celebrate 80 years of partnership in 2018. The company has doubled its direct employment in the UK since 2011 and tripled its spending with more than 250 companies in the UK supply chain over the same period, to £2.1 billion in 2016. More than 18,700 jobs in the UK are at Boeing or in the company’s tier one supply chain. Earlier this month Boeing broke ground for its first factory in Europe, in Sheffield. We are pleased to work with our partners, including the British Government, and provide such a vote of confidence in the UK.”
Bombardier’s statement regarding the Commerce Department Countervailing Duties Preliminary Decision:
“We strongly disagree with the Commerce Department’s preliminary decision. The magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs. This result underscores what we have been saying for months: the U.S. trade laws were never intended to be used in this manner, and Boeing is seeking to use a skewed process to stifle competition and prevent U.S. airlines and their passengers from benefiting from the C Series.
The simple truth is that Bombardier created a superior aircraft that is more efficient, more comfortable, and quieter. The C Series serves a market segment not supported by any U.S. manufacturer. Delta wants to bring this remarkable new aircraft to the U.S. flying public. Boeing wants to prevent U.S. passengers from realizing these benefits, irrespective of the harm that it would cause to the U.S. aerospace industry and the cost to airlines and consumers.
Looking beyond today’s and next month’s preliminary decisions, the International Trade Commission will determine next year whether Boeing suffered any injury from the C Series. Because Boeing did not compete at Delta and because Boeing years ago abandoned the market the C Series serves, there is no harm.
There is wide consensus within the industry on this point, as well as a growing chorus of voices, including airlines, consumer groups, trade experts, and many others who have come forward to express grave concerns with Boeing’s attempt to force U.S. airlines to buy less efficient planes with configurations they do not want and economics that do not deliver value.
The U.S. government should reject Boeing’s attempt to unfairly tilt the playing field in its favor and to impose an indirect tax on the flying public through unjustified import tariffs.”
The amount of tariffs is a shocker.
The Seattle Times has this quick take.
An appeal is certain. But first, the process returns to the US International Trade Commission to determine what, if any, injury to Boeing and the US aerospace industry occurred or is “threatened.”
If injury is determined and the final decision next year upholds then preliminary findings, which is all but certain, then Bombardier and the Canadian and UK governments have several options, as outlined here.
One option speculated by some aerospace analysts that Bombardier and Delta could avoid tariffs by selling the airplanes to a non-US leasing company for lease to Delta is misguided.
The airplanes still require importation to the US for Delta to fly them. These would still be subject to import tariffs.
Me too …
How to be speechless when we hear the sound of a 60’s plane?
Ideas that this isn’t political / Trump can now be put to bed.
You can see Boeing’s efforts to control damage. When is Macron’s & Trudeau’s next meeting?
Beyond belief !! So let say a 50 millions plane becomes a 170 millions one ??
I am very sad to see how it is turning. I am afraid that this will leave marks on the USA-Canadian relationship for a long time. This is a shame and probably the end of the Global Boeing.
From now, no easy sale for Boeing around the world…. From now, « Je suis Bombardier » against the weak stuff from pervert cie with the legend going to garbage! Come on Boeing ! Wake up !
A very sad moment for a once proud trading nation. My heart breaks for both the USA and Boeing.
even though I understand the point o the tariff, I’m unsure who pays it. who actually pay this tariff? Delta or Bombardier. if so, doe s this mean this deal will be scrapped? what prevents them from cancelling this contract and renegotiating another ( it might be an exercise if PR or futility) – but, I’m trying to understand the actual implications of who is affected and exactly how.
Is it just me, or was the statement made in a way that the reason for this decision was not so much the low price, but the subsidy that Bombardier received?
In any case, this decision truly leaves one speechless. While I support global trade, I very much hope that the Canadian and UK governments find appropriate measures to “pay back” Boeing.
And for Bombardier it seems, they should close down their US sales offices and focus on international markets.
The reason that the press release focuses on subsidies, is that today’s preliminary decision was in a subsidy investigation, not the separate dumping investigation.
Countervailing Duty (government subsidy) and dumping cases are handled separately. Boeing’s petition to US Commerce and USITC resulted in separate CVD and dumping investigations being launched. For some reason, people here have tended to focus and obsess on the dumping case while ignoring the subsidy case. Today’s preliminary decision is only on the CVD (subsidy) case. Note that the title of the US Commerce press release that Scott posted mentions Countervailing Duties but says nothing about dumping. See below.
“U.S. DEPARTMENT OF COMMERCE ISSUES AFFIRMATIVE PRELIMINARY COUNTERVAILING DUTY DETERMINATION ON IMPORTS OF 100- TO 150-SEAT LARGE CIVIL AIRCRAFT FROM CANADA”
I feel insulted that Boeing now feels they have to do “we are here in Canada” ads on TV. How stupid do they think we are?
Come on Justin!
While not literally offshore, a Canadian sale to the U.S. is, of course, ‘international’ or – as non-Americans say – export, overseas, or foreign. What sanctions will be applied against DL for its ultra-unpatriotic, anti-American behavior..?
In the case of anti-dumping duties, which were not the subject of today’s preliminary CVD (subsidy) decision, if the custom’s invoice lists Delta as the importer, then Delta would have to pay the duties. Following is an excerpt from the US Customs Dumping/CVD Duty FAQ.
Q: Are there any other special requirements for imports subject to AD/CVD duties?
A: The regulations require that, prior to liquidation and the assessment of antidumping duties, the importer is required to file a certificate advising whether it has entered into an agreement or otherwise has received reimbursement of AD duties. If an importer fails to provide a statement of reimbursement prior to liquidation, CBP will presume reimbursement and double the duties.”
The full FAQ may be downloaded at the following link.
This seems reckless (something I don’t think would be novel for this not very old but already multiply reckless admin). A duty finding in the 75% range as had been suspected would still have been a problem.
But this initial finding may backfire quite rapidly on Boeing. Good luck on that fighter jet campaign to Trudeau, Thomas Bell. You’ll need it!
I do also wonder what this does to Theresa May and her precarious coalition gov’t in the U.K. The Northern Ireland supply contracts to the C-series matter a great deal.
The Democratic Unionist Party (DUP, not to be confused with Ulster Unionist Party (UUP)) may very well be upset that it is not in the gift of the UK prime minister to influence the perceived injustice of this case – but if the DUP walks away from supporting May it will have surrendered whatever influence was derived from its cosy arrangement at Westminster – worth a promised £1 billion investment/spend in NI at the last count, I believe.
But if they don’t they could easily lose their seats, and a lot of pundits are expecting another UK election in a year or so. Ditching the May govt might help them electorally
UK has 5 year parliament rule- unless 80% of Mps agree. While that happened with the most recent election, turkeys never knowingly vote for an early xmas. No chance of early election this time
In the end … does the amount of duty really matter? I never really expected that BBD/DL would pay them in any case. Either they find a way around them (final assembly in the US?), win on appeal (unlikely) or the deal just gets cancelled and DL buys either Embraers or Airbuses.
But clearly free trade is dead in the US. TPP is dead already, TTIP is in its death throes and I expect that Trump will cancel NAFTA soon enough after Canada and Mexico refuse to bend over.
Was it not ironic – if he understands the term – that DJT was standing in front of a 787 in final assembly (comprising large chunks of overseas-supplied aerostructure and systems equipment) when, as I understand it, he uttered the famous ‘America first, America only, America always’? Boeing’s many tax breaks – read ‘subsidies’ – are surely well documented.
Let us also not forget that Trump appointee and key decider of tariff Wilbur Ross made a chunk of his fortune as a ‘distressed asset’ investor (no less than Forbes Magazine calls him thus).
Any other admin, and I’d be more circumspect about saying this, but couldn’t one argue that he is attempting to bring on the demise and eventual breakup of Bombardier thru scuttling the Delta sale, creating opportunities for some of his relished distressed assets to be scooped up by (ok, speculation here) some of his friends?
Not beyond wildest imagination, IMO.
very sad day for the USA and global trade, they have made their once closest ally an enemy with this clearly corrupt ruling all in the name of helping a US Fortune 100 company that has refused to reinvest in better product and compete on an evern playing field. I hope the rest of the world will now boycott every US product in favour of Canadian, European, Japanese, and Chinese product. This sort of see-through corrupt behaviour would be expected from the North Koreans, but the country that claims to be the moral leader of the world????….the US is rapidly losing its stature as a leader that can be trusted…a very sad day for the entire world. Hopefully, Canada and the UK put similar tarrifs on the 737.
I found the Reuters article at the link below on whether Bombardier would or could pay any duties imposed to be interesting. Since it relies on unnamed persons familiar with Bombardier’s thinking, one should exercise the usual caution about fully believing reporting based on unnamed sources. I was one of the few people here who thought all along that Boeing would probably win, but I am very, very surprised, like everyone else, by the size of the duties imposed, it will be interesting to see the details of Commerce’s calculations, they came up with a duty of 219.63% when Boeing in its petition had only estimated the value of subsidies through the end of 2016 at 79.41% ad valorem (see page 8 in the redacted version that Scott posted). I would have expected Boeing’s requested duty to be as much, or a little bit more, than they thought they could possibly get. It seems to me that the chance of budget buyer Delta paying duties anywhere near 219.63% are zero.
A quote from the article follows.
Although Bombardier cannot legally skirt the measure by agreeing to pay any duty directly on Delta’s behalf, trade lawyers say it could technically import the jets itself through a local subsidiary in a way that would be neutral for Delta.
But doing so could significantly depress the net amount Bombardier receives and could be seen as legitimising Boeing’s complaint on prices, which Bombardier has rejected.
“The economics won’t make sense,” a person familiar with the company’s thinking said this week.
Secondly, Bombardier would not readily allow Delta to walk away from the deal because it might risk other buyers asking for an “out” which could prompt an unravelling of its commercial recovery plan.
“Delta may ask to cancel; Bombardier will say no,” another person familiar with the case predicted. None of the sources agreed to be named because of the matter’s sensitivity.
A new chapter in history has just opened this evening. What will be the first words? The fact that Wilbur Ross no longer understands business? And that he is ready to sell his soul to the devil to get closer to Donald Trump? We are all confronted with an absurd situation and a black future! Please, Ab_Robert and Scott, explain to us what you expect from Delta, Bombardier and other US airlines. We are not obliged to hear o how Chicago Boeing are laughing. To hurt the other by saying that it does us good is the first sign of the evil!
Wilbur Ross is an unreconstructed nationalist merchantilist. I had no idea of this until he started revealing his politics on the US business channel CNBC during the rise of Trump. Because he was an international business man, I always assumed that he was a sort of internationalist (not that I gave it too much thought). It was really jarring to hear him during that election process. How can a person who made his fortune in international investing be this way? It was perplexing. But I have since understood that all those times he made money from distressed assets, he basically must have approached it as an us vs. them thing, where he viewed himself as scaming (or winning) vs. the idiot foreigners. Basically a fixed pie view of trade/economics. Trunp is really no different. Although his own habitat was NYC real estate, the same thought process applied. In a deal, he saw the other side as the adversary, it is either he won the other person lost or vice versa. This is their worldview, and they project this to groups, races, nations.
The mistake you and others make is trying to apply fixed ideological labels like “unreconstructed nationalist” or “internationalist” to these people. They do not fit into these tidy little boxes of yours.
Ross and Trump are businessmen and politicians. They are not interested is what is best for either the international community or for America. They are interested in what is best for themselves, so their beliefs/positions are fluid and will change depending on their needs. They will support globalization when it suits them (e.g. when building a fortune investing internationally) and abandon it when it doesn’t (e.g. when running a government elected on nationalist sentiment).
If you analyze the behaviour of people or organizations in terms of their personal goals instead of their supposed ideology, everything becomes much clearer. This is how Boeing can fight Bombardier’s subsidies while happily accepting their own. It’s why Richard Anderson can complain about subsidies to the ME3 while CEO of Delta and then support them as CEO of Amtrak.
Yes, Trump’s view of life is “fixed” pie, which is standard in Marxism.
He’s really just a hawkish Democrat, more loud-mouthed than those of old in WA state.
Thankyou for identifying nationalist and mercantilist as belief systems.
Hamhanded move. Boeing’s global reputation is devalued.
Boeing, little guys in short pants. But again, how could one judge this organizational behavior?
With this magnitude of tariff(and more on top of this later fm the separate price-dumping charge) far far higher than even Boeing themselves hv been
aiming/seeking from this case, I can only draw 1 conclusion:
The Trump admin is purposely initiating/effectively declaring a trade war against Canada and the U.K.
I’m uncertain about the motives behind this(e.g. more ammo for NAFTA renegotiation? U.S. Treasury need more income fm tariff/duty? Trump wants BBD to relocate CSeries assembly fm Montreal to Wichita?) but I think even Boeing themselves are surprised about the 220% tariff outcome. I believe in this era, nobody on earth makes anywhere near 220% profit margin fm trading any type of product except narcotics.
Grab your popcorn and wait for fireworks to fly everywhere…..soon. This dispute has way more than meeting the eyes.
Worst of all, this kinda trade war has no end in sight:
AC will be importing 737Max x61 to be built @ Renton and import into Canada. Imagine Canadian authority slapping equal % magnitude of tariff/duty onto that deal if for no reason other than retaliation(though not difficult to find justification as those costly to develop Leap engines hv to be sold to AC @ ‘below cost’)……AC will cancel and buy 320Neo(irony is that it may still be with Leap engines) instead.
Also unlike the CSeries JV with BBD, Canadian gov’t has no equity stakes in AC.
Totally 787 x21 still on firm order but not yet delivered to BA+VS. All built with wings assembled in the U.S.(Also Japan) and sold @ below cost(i.e. that infamous US$28b deferred production cost and BA got 787 launch pricing long ago) which hurt sales of 350 wings developed+built by Airbus U.K. Imagine U.K. authority slapping equal % magnitude of tariff/duty onto those 787 deals if for no reason other than retaliation…..BA+VS likely won’t cancel but clearly won’t buy 787 anymore but adding more 350 instead if hv similar widebody need in the future.
Everyone gets hurt in a trade war…..except lawyers.
I think you are being a bit disengenuous here FLX,, when you write twice in judgement of Canada’s and the UK’S Responses, ” if for no reason other than Retaliation”.
It is not retaliation, but merely these two countries using their rights, per the rules, which Boeing and the US seem to see fit to apply so exactly.
In Boeing’s own words, “Global trade works only if everyone plays by the rules that we’ve all endorsed to ensure fair competition, as adjudicated by independent national and international bodies. This dispute has nothing to do with limiting innovation or competition, which we welcome. Rather, it has everything to do with maintaining a level playing field and ensuring that aerospace companies abide by trade agreements.”
They asked for it, they just might get it, much to their regret.
I believe Boeing forgot the old adage, “Never throw stones when you live in a glass house.”
But there is the “T-factor”.
If only. Fact though is that the US has much more muscles and neither Canada (as US is the biggest trade partner) nor the U.K. (now can’t afford to upset the US after Brexit) will dare to do anything significant.
I am surprised that this has not been brought up before.
Between the 787 and 737MAX, Air Canada has ordered a lot of Boeing planes in the last few years. The 787s were ordered very early so almost certainly were priced below cost. Getting AC to convert their mainline short-haul fleet from the A320 family to the 737MAX was also a major coup for Boeing, so no doubt the pricing was “aggressive”. Perhaps Airbus should launch a trade complaint in Canada against Boeing alleging dumping of the 787 and 737MAX!
Of course, some of you will remember Airbus only got the contract for Air Canada’s current A320 fleet by bribing officials back in the 1980s when AC was a government-owned carrier. No one has clean hands in this business.
Regarding:” Airbus should launch a trade complaint in Canada against Boeing alleging dumping of the 787 and 737MAX!”
Only a Canadian manufacturer can file an anti-dumping complaint in Canada. The EU has anti-dumping laws very similar to those of the US, which a EU manufacturer could use to petition from relief from alleged below cost imports into the EU, but they would not apply to sales in Canada.
By the way, the preliminary decision that is that was the subject of Scott’s post has nothing to do with dumping, it was a decision in a separate countervailing duties (government subsidies) case.
Airbus and Boieng have already, many years ago, launched government subsidies cases against each other with the WTO. Perhaps in our children’s lifetime, if not in out own, the WTO will reach final decisions in these cases.
So delta cancels the order, then leases them instead from a company loosely set up by bombardier in the eu or far east! 5 years down rhe line they buy them outright at a much reduced rate. What are rhe odds on that one 😉
I think Scott and others already explained quite clearly alternative lease arrangement will still trigger similar pro-rated tariff/duty thru lease value equivalent to purchase value methodology re U.S. tariff/duty rules.
Could Delta itself create an offshore subsidiary to own and run the CSeries aircraft? Delta Canada…? Then Delta simply wet leases from Delta Canada.
And by wet lease I mean of course that Delta Canada run a completely independent airline with passengers fed from Delta through code-sharing type arrangements.
Most likely Canadian airlines are not allowed to fly domestic within the US.
It is great to see an investment banker like Secretary Ross standing up for the forgotten American unlike all the bankers who worked for the Obama administration. This is exactly what President Trump promised to do during the campaign. I think most people are stunned to see a politician actually do what he promised.
So you agree this is Trump driven.
Have you considered that fellow Americans could lose their jobs in the US because of this?
Meantime Boeing wants to move some of its business to China taking Jobs away from Americas.
Well done Boeing and your mates in Government.
Perhaps Airbus can now hit Boeing on every sale it has lost to the 787 on the basis that they have knowingly lost $30m on every frame.
This is a stupid situation.
Why not accept that the aerospace industry is geared on practices that are an imposition on tax payers, wherever the products are made, and make them all resort to the level playing field most industries have to use.
“Airbus can now hit Boeing on every sale it has lost to the 787 on the basis that they have knowingly lost $30m on every frame.”
For transactions outside the U.S., U.S. trade regulator has no jurisdiction re any tariff/duty due to dumping or whatever reasons.
For transactions within the U.S., domestic producers like Boeing is legally allowed to give away airplanes for free(i.e. total loss on every sale) to domestic customers even if that hurt foreign producers’ sales in the U.S.
Maybe the US trade regulator can’t hit Boeing for dumping, but the EU trade regulators, of which the UK is still a part, certainly can!
If EU regulators launched a response NI might turn against Brexit, Brussels makes a point which the UK alone can’t. Puts May in a spot.
This dispute is also about Delta. Richard Anderson started this fight with Boeing by refusing to buy anymore product from Boeing. He also uses his legislative lobby to block theEXIM bank which makes money for the treasury. He also talk down Boeing product to pissed of Boeing THE NEW CEO for Boeing was not going to let Delta pisson their customers no more especially the ME3. BDRAF was just caught in the middle of this fight.
Bad news for Delta. I guess the silver lining is that Richard Anderson can help line up $7 million 777s instead.
The United States has declared economic warfare against Canada – its best customer (the US enjoy’s a $12Billion trade SURPLUS in goods in services sold to Canada). Canada is being treated like North Korea – so much for being “good neighbors”.
A 220% tariff is absurd especially considering the CSeries has 50% American content. How can they impose 220% tariffs on – for instance – Turbo Fan engines from P&W in Connecticut ?
This news comes on the same day that Boeing announced a JV with Comac to build a 737 completion center in China which will result in American jobs going to China.
I hope that Canada will retaliate by imposing a 220% tariff on any future orders with Boeing. Canadian airlines can buy what they need from Bombardier and Airbus.
“This news comes on the same day that Boeing announced a JV with Comac to build a 737 completion center in China which will result in American jobs going to China.”
Are we going to hear how the President is outraged with this decision?!
I somehow don’t think so.
Are his supporters slowly starting to understand he is no better than any other politician, and in many ways, worse?
That’s an interesting point. A large part of an airplane’s cost is the engines. Perhaps Bombardier could sell the airframes and the engines could be sold directly to the airlines by P&W?
Sure is stupid, been going on for years – the “softwood lumber” fight for years, with fallacious claims that US companies keep bringing up. (But may get amusing as Canadian forestry companies have been buying into US forestry companies and Weyerhauser may still have substantial forestry operations in Canada (they bought MacBlo several years ago).
Agree that this is part of the longrunning BA Delta thing. I expect DL Will ramp up the retoric over sales of BA products to non US carriers, if a 787 or 777-8/9 flys to the US the seats are being dumped as the aircraft was dumped, or something like that.
I still suspect US producers in politically sensitive states to be targeted in NAFTA renegotiations.
Airbus have an opportunity here, take DLs C series order, resell them to non US opertors, and DL takes additional Airbus products in exchange, with an unwritten favor due at sometime in the future.
Ps A319 is going nowhere sales wide, and if DLs C series frames are so cheap they might make a nice profit on both sides of the deal.
And the beauty of your idea is that Boeing will hv no similar trade dispute avenue against Airbus due to dumping /subsidy by a foreign producer…..
@ least not until Alabama gain total independence fm the U.S. and 319Ceos/Neoss built there for DL to be regarded as exports into the U.S.
I knew the news was grim when Bombarder leaked earlier today, hey, we are talking to all of China to buy the CSeries and we will sign deals when Treadeau comes. I don’t trust Bombardier with that kind of talk. It was perhaps 2 years ago that Beadouin said he was exploring “consolidation” within the industry, which was total and complete lie. Today, Bombardier still hasnt consolidated with anybody, Siemens just merged with Astlom on the train side, and Bombardier Areospace still the same as it was except with cash infusions from Quebec, which is how they seem to like it. Make no structural change, take government money. Extend and pretend.
Anyway for this situation, I think Delta should just invest in Bombardier for them to build a final assembly facility for the CSeries in the US (afterall Delta owns a refinery). All US deliveries come from there. The cash for that has to be less than this tarriff lunancy, for which Delta is on the hook. After the ill wind of Trump and his nationalists blow over, they can sell their shares. And Bombardier can use the facility to build other planes at that time, if they want to move all CSeries back to Canada. If they have pending capital investment they haven’t done that their US facilities, say for the Global, they can roll that into that to offset some of the cost.
I have advocated this US build under other handle (separate computer), and I really think is a weak link of the Boeing attack. This is so because Bombardier is a Canadian high technology manufacturing company with integrated North America supply chain. I think they have that flexibility to just build in the US and completely render this idiocy flat footed. This sort of we will slap tarriffs on you, would be a very good play vs say some commodity company, or perhaps companies that are structurally tied to another region of the world, but within North America (esp. US/Canada) the economies are so integrated, that the flexibility is there to respond by calling their bluff. Build a final assembly plant in Kansas, ship US orders from there!
Doing final assembly in Kansas for US orders would be away around this problem. The only thing I don’t like about this is it will give Trump a big win. He will loudly boast of all the jobs he brought to Kansas. Trump is a bully and Canada being a small country is easy to beat up on. Never in a million years would he take this kind of action against a Chinese or European company. Aside from the fact it would give Trump a big win already 50% of the content of this jet is American. How much American content is enough? Are Canadian’s not allowed to have any jobs?
Yes, but again only for US orders. And really, I advocate that only if Bombardier feels the US orders are important enough to maintain access to the market. If they truly have a Chinese or other option, by all means give them the finger, both hands! And the issue of Canadian workforce can be mitigated by doing contra adjusting the supply chain, such that for example, 50% total content is maintained, or offset over other non CSeries products. At the end, all I am after here is Bombardier find their way around the problem, not to accede to anything these bunch of lunatics want.
And you can forestall or mitigate Trump by keeping all these low profile and not a big deal, don’t invite them to cut any ribbons. Afterall Bombardier already makes stuff in Kansas. It’s a routine factory expansion, move along now. Trump will still say whatever he wants on twitter, but fine, just ignore him.
Well, Bombardier has the former Learjet facility in Wichita, doesn’t it?
The ruling is quite specific in the aircraft description stating a minimum 2900 NM in range. SO… what if BBD were to inert one of the fuel tanks on the Cseries and deliver a 2600NM subtype. This would no longer compete with Boeing 737 and would no longer be subject to duties… and it would still easily meet deltas mission profile right? Problem solved. Please send the consulting fee to my Paypal account BBD.
The way the scope statement of the CVD decision is worded, the short range C series variant that you propose in order to avoid duties, would have to have a different FAA Type Certificate than the current C Series, and could not be covered by a supplemental certificate to the current type certificate. The quotes below are from the fact sheet at the “Click HERE for a fact sheet” link in the US Commerce press release in Scott’s post.
“The scope of this investigation covers aircraft, regardless of seating configuration, that have a standard 100- to 150-seat two-class seating capacity and a minimum 2,900 nautical mile range, as these terms are defined below.”
“A “minimum 2,900 nautical mile range” means:
o able to transport between 100 and 150 passengers and their luggage on routes equal to or longer than 2,900 nautical miles; or
o covered by a U.S. Federal Aviation Administration (FAA) type certificate or supplemental type certificate that also covers other aircraft with a minimum 2,900 nautical mile range.”
AP, just another angle, most likely covered.
Delta cancels the order, BBD sells to COMAC and buy it as second hand/used from COMAC. Will same apply?
Yes, because country of origin (which determines the duties) would still be Canada.
Who will determine the price/value of a second hand CS100 on which the tariff is payable?
How difficult would it be to get a new type certificate? Wouldn’t it be mostly a paper exercise where all the data is already available from the previous flights?
Of course it’ll still be a nuisance, but possibly an affordable one given the height of the tariffs.
Aviation is a hobby for me, I trained and work as a medical physicist, not an aerospace engineer, so I don’t have the background to do anything more than guess at what would be involved in getting a new type certificate for a new variant of a previously certified aircraft. Maybe this would be a good question for Bjorn, who did train and does work as an aerospace engineer. If Bombardier pursued this, it would probably be the first time in recorded history that someone with an aircraft variant that could qualify for a supplemental type certificate, would instead insist on getting a new type certificate. My guess is that for large airliners, the word simple doesn’t belong in the same sentence as “type certification”, and that new flight tests would be required to verify predicted performance data.
I do know how to look up and read regulations, since my customers expect that I will keep them from getting fined by the Nuclear Regulatory Commission or state radiation safety regulators, and in order to perform this function, one has to be able to be able to look up and understand regulations. Based on my claimed ability to look up regulations, I believe that there is a good chance that getting a new type certificate for a short range CS100 version would not be successful in evading CVD or dumping duties applied to the original Cs100 version. This is because under US law, when the expectations of the ultimate purchasers of a later developed product are the same as for an earlier product that was subject to CVD or dumping duties, or the ultimate use of the earlier developed and later-developed product are the same , CVD or dumping duties that applied to the earlier product can be applied to the later developed product. See the excerpt below from Chapter 26 of the USITA Enforcement and Compliance Division Anti-Dumping Manual which is tiled “Scope and Anitcircumvention Determinations”. For the full chapter see the link after the excerpt. It would seem to me to be the case that if Delta acquired a short range CS100 version, there is a good change that US Commerce would rule that Delta’s expectations and use for this version were the same as for the original CS100, and apply any CVD or antidumping duties to the short range CS100 that had been applied to the original CS100.
“Merchandise developed subsequent to an investigation can be included within the scope of an AD/CVD order, even if its physical characteristics are not the same as those described in the order, if the Department finds that:
• the later-developed merchandise has the same general physical characteristics as the merchandise with respect to which the order was originally issued (the ‘earlier product’);
• the expectations of the ultimate purchasers of the later-developed merchandise are the same as for the earlier product;
• the ultimate use of the earlier product and the later-developed merchandise is the same;
• the later-developed merchandise is sold through the same channels of trade as earlier product; and
• the later-developed merchandise is advertised and displayed in a manner similar to the earlier product.
See section 781(d) of the Act, and 19 CFR 351.225(j).”
Here is an outline of the FAA Supplemental Type Certificate process from the FAA website at the link following the outline. I assume that acquisition of a completely new type certificate would include at least as many steps.
STC process – major steps, as required
• Applicant applies for STC
• Familiarization and preliminary type certification board (TCB) meetings
• FAA develops certification program plan
• Establishment of certification basis by FAA
• Applicant submits data for approval
• FAA design evaluation
• FAA and applicant hold specialists and interim type certification meetings, as required
• FAA performs conformity inspections
• Engineering compliance determinations
• Pre-flight TCB Meeting
• Applicant performs ground inspections, ground tests, and flight tests
• FAA reviews manufacturer’s flight test results and issues TIA
• FAA performs conformity inspections, witnesses tests, performs official certification flight tests and flight standards evaluations
• Functional and reliability testing
• FAA approves flight manual supplement or supplemental flight manual and holds final TCB meeting
• AEG completes continuing airworthiness determination
• FAA issues STC
It is a start of a long process of feeding lawyers instead of putting the money and attention of building better aircraft faster and cheaper. The size of the tarrif is a green light for hordes of lawyer to start working and invoicing. This will not improve the Boeing DAL relation and some Airlines like to see more Aircraft manufacturing competition than just Boeing vs Airbus. The Dassault Rafael is now more likely to be the new Twin Engine fighter to replace the CF-18’s.
” Dassault Rafael is now more likely…to replace the CF-18″
Or the Typhoon by Eurofighter in which the U.K. has a significant stake thur BAE System?
Canada and the U.K. nursing each other’s economic wounds on CSeries inflicted by Boeing/Trump admin…..
Think we all in agreement, real cluster….!
Not looking for loop holes while its time to lick wounds, seating layout/capacity well defined,
….but is there not an opportunity with the defined “2900Nm minimum range”? (This indicates for me the MAX7 basics and protection).
Maybe an “CS150”, reduced MTOW and fuel capacity, de-rated engines. Max range 2500Nm?
Similar a “CS350”.
Long live the CS500!!!
See my post above regarding the preliminary CVD range scope. Your proposed CS150 would not be exempt from the preliminary CVD order if it was covered by the CS100/300 FAA type certificate, or by a supplemental type certificate to the CS100/300 FAA type certificate.
Thanks AP, you “legal eagles” got it covered, would have been a supplementary FAA certificate.
If BBD develops an CS500 with >150 seats that will require a “totally” new FAA certificate will this still be effected by this decision?
And lastly, what if the CS100/300’s assembly is moved to outside Canada?
China/UK/Ireland are mentioned. “The best place to commit a crime is in front of the police station”, what happens if the assembly is moved to the US?
That will be kinda funny but actually straightforward:
BBD CS1 assembled/built & marketed by BBD Learjet division @ Wichita under license granted by common parent BBD Aerospace.
Plattsburgh airport will be a good spot (100km south of Montreal) its also a foreign trade zone.
“Plattsburgh airport will be a good spot.”
Nowhere nearly as good as the existing BBD Wichita site if for nothing else but far fewer/cheaper new infrastructure requirements and far better access to a skilled+experienced aerospace talent pool.
When CSeries global supply chain is already stretching across the N.Atlantic, 100km distance fm Mirabel is not gonna be a huge advantage in terms of CSeries production logistics.
The naivete and drama on this site is laughable. That anyone believes Boeing made this move on a whim and without first understanding and considering the ramifications, is just plan silly. And for those who are predicting the beginning of the end for Boeing…
>>CBL – “probably the end of the Global Boeing.”
>>Capitaine Scarlet – “From now, no easy sale for Boeing around the world”
Get a grip!
The belief this Bombardier/Boeing spat is going to have any affect on future Boeing business elsewhere is completely misguided – it’s not going to happen. Other than POSSIBLY Delta, no airline will be offended by this dispute or its outcome.
Airlines want the best product for their business. They don’t care if Airbus has executives being indicted for corruption. They don’t care if Boeing had a former executive in prison from a bad tanker deal. They don’t care if the A380 has repayable or non-repayable launch aid. They don’t care that Boeing uses program accounting and just increased the 787 accounting block. None of this matters to an airline. In other words, airlines don’t care about the stuff Scott drones on and on about. It’s great for pandering to the fanboys, but none of it matters to decision makers in this business.
So along with all the other things mentioned above, airlines don’t care if Boeing plays hard ball with Bombardier, who out of desperation was trying to buy a small slice of the market by selling airplanes at artificially low prices. None of that matters to a board at any random airline who is responsible for making a sound business decision and doesn’t have the luxury of weighing up which aircraft supplier has the best manners.
There is a remote chance Canada or the UK will try to fabricate some type of retaliatory trade move, but Boeing has already stated they have weighed this possibility and accept this as a risk of bringing the dumping claim against Bombardier. Why is Boeing so bold – well, if those countries try to block Boeing from doing business in their countries, the companies they really hurt are their own in-country airlines – they lose out on being able to compete the only two jet manufacturers in the world against each other. Boeing will still fill it’s skyline elsewhere, but the in-country airlines no longer get a choice of aircraft or competitive pricing. It’s a losing proposition for a country to block Boeing from doing business within its borders.
And for Kevin, who rightly points out the US enjoys a $12B trade surplus with Canada – you fail to point out this is on $320B in total exports to Canada and over $1,100B in total US exports. $12B is a nit. Obviously not enough to give the US Commerce Department any pause with moving this case forward.
Thank you AP_Robert for bringing at least one rational voice to this dialog. Your factual posts are appreciated by at least some here, even if facts don’t always sit well with this site and its readers.
“.. That anyone believes Boeing made this move on a whim and without first understanding and considering the ramifications, is just plan silly. And for those who are predicting the beginning of the end for Boeing…”
I’d assume about the same amount of careful premeditation
that we have seen in the last decades of any US entity and the US itself.
So absolutely carefully premeditated that later resultant blowback bends their flapping ears into absolutely strange shapes.
I think Boeing will throw in some gold plated seat belts buckles on Air Force One after this?
“Airlines want the best product for their business.”
Agreed. The logical implication of this statement, however, is that airlines want choice. They may not take kindly to anyone forcing out the competition.
Suppose an airline wants the CS300 because it’s the best product for their business. Do you really think they’ll order the 737 MAX 7 instead?
Yes. Airlines want competition. But the situation you are describing is of no consequence to the vast majority of airlines. Only the US carriers. The the situation you describe is only of consequence to Boeing or the Airlibe, if that US carrier who would be considering 737-7. How many 737-7 aircraft do you think Boeing expects to sell in the US over the next 10-15 years. I don’t know, but I’d guess it’s a very small number.
Why always talk about the dollar, to believe ideologically, precisely, that this is the ultimate criterion of decision? You forget that boards of directors manage business risks and a bad reputation of a supplier can cause difficulties of any kind! Do you think the network of airlines linked to Delta will not think twice before ordering Boeing single-aisle? You really believe that these companies want to have only two representatives who come to ring their doors to sell aircraft? Do you think Boeing is immune to social networks, potentially likely to launch a boycott? Boeing has just disrupted the single-aisle market by perniciously using the government arm to continue imposing its product choices …
Hello Capitaine Scarlet,
Below is what Delta CEO Ed Bastian had to say about the relationship between Delta and Boeing, and Boeing’s chances in Delta’s current SA RFP in an interview earlier this month. For the full interview, see the link below to a Puget Sound Business Journal article. Note that Mr. Bastian’s answer to “What factors will sway your decision?” begins with “Price is very important”.
Having only two representative ring your door for aircraft sales is not optimal, but it is a lot better than having only one representative ringing your door.
“Q: Your airline is shopping for 75 or more new single-aisle planes, a multibillion-dollar order. Analysts have suggested Airbus will win it because Boeing filed trade complaints about your decision to buy Bombardier C Series jets. Does Boeing have a shot?
A: Absolutely they do. I know there’s been some (speculation about) frustration between (the companies about) the Delta relationship. I can assure you that that is not the case. I’ve met with Boeing CEO Dennis Muilenburg. I’ve met with Boeing Airplanes CEO Kevin McAllister. We’ve reaffirmed the strength of our relationship. I’ve known Kevin for years through (his previous job at) GE.
Q: Are you meeting McAllister or Boeing people while you’re in Seattle? A: No, Kevin comes to see me. I don’t have to come see him. Delta is the second-largest operator of Boeing jets in the world, next only to Southwest Airlines of Dallas. Including Delta’s ownership stakes in our affiliates AeroMexico, Virgin Atlantic, Gol Linhas Aereas of Brazil and China Eastern Airlines, we are the single-largest airline operator of Boeing aircraft equipment in the world. We have every reason to maintain that relationship, protect that relationship, invest in that relationship and nurture it for the future.
Q: What factors will sway your decision?
A: Price is very important but not the only factor. It’s not the only (one) by any means. Availability, delivery slots, the quality of the product, the efficiency of the product for fuel and other reasons, the range. There’s a host of characteristics that are different between the Airbus and the Boeing product that we have to look at. We want both companies to have the best shot and put their best foot forward and we’ll make a decision hopefully by the end of the year.”
I agree with most of your post, but at the same time US airlines lose out on having the choice, competitive pricing and the best suitable aircraft for them.
I don’t quite understand Boeing’s motive. As you state, they probably don’t expect to sell many 737-7 anyway. And by the time Bombardier has a CS500 that could eat into their 737-8 in some way, Boeing is probably close to launch the next generation of single aisles aircraft. So why bother?
Thinking long and hard is not the same as thinking smart.
The difference, besides thinking ability, is values.
Boeing makes mistakes.
Elaborating: working hard to produce better product for less vs. playing political games.
What a shame. Certainly this kind of dark, selfish greediness will reap a bitter harvest in the end. Where is the Boeing of integrity, the Boeing of Bill Boeing, Bill Allen, T. Wilson, Joe Sutter, and the Incredibles? Seems to me this is shortsighted behavior in the extreme. The results of unleashing this trade war will surely come back to haunt its myopic architects. Isn’t it better to be motivated by the positive attributes of innovation and creativity instead of fear-based desire to destroy the “competition”?
A sad day for Boeing and the US.
Well, it can’t last, as our whole world system is based, in the main, on trust, goodwill, and friendly cooperation; not “us vs. them”, as some are currently thinking. However, one can see it may take some time for this destructive wave of consciousness to pass.
As expected, Embraer very happy.
I don’t think Embraer should be enjoying this too much… this probably just means they’re next in the Boeing litigation cross-hair.
First the stupid WTO against Airbus, well that didn’t really work out so now a similarly stupid dumping case against Bombardier. Now they’ll be thinking “whether or not we ‘win’ these cases, we’ve certainly made life difficult for those two – who can we pick on next? Ahh… Embraer!”
Embraer is much more of an american company than you believe. Most of the decision making and HQ has already moved to US.
Embraer is still very much Brazilian according to Wikipedia and their (really, really horrible) website…
I looked at their Board composition etc, does not look very American to me?
I am not talking about shareholders. But about company distribution around the world. All the business aviation unit is now located on US. Even the executive VP is american. Final assembly of executive jets is moving to US. They even did a new engineering unit in US. There is a composite materials factory for E2 and KC390 in Portugal, most of sales force for commercial aviation is in US, Netherlands and Singapore. And as for the Brazil government influence, they are in discussion of selling their golden share option on several companies, including Embraer (source in Portuguese http://www.valor.com.br/empresas/5109590/governo-quer-fim-de-golden-share)
Brazil is not a great place to do business at the moment, veered toward Marxism.
Some Brazilian companies have been investing in the US, a meat-packing operation is strong, now own hamburger chains Burger King and Tim Horton’s, took over a Canadian meat packer when it stumbled (probably in substantial part because US regulators had confidence in the Braziliann outfit).
“Embraer very happy.”
And they can stay happy as long as EMB do not even try to sell anything larger than 175E2(i.e. 76seats or less) in the U.S. mkt. Any trade dispute outcome that hurts BBD is a happy outcome for EMB for obvious reasons.
However, EMB won’t be so happy as soon as they try to sell 190/195E2(97~146seats) in the U.S. mkt and thereby crossing that line drawn by Boeing. 195E2 will face similar pricing rigidity(i.e. sell @ below cost is not an option anymore) same as CS1 in the U.S. mkt. Luckily for EMB, 190/195E1 or E2 hv never been popular among U.S. customers anyway with no more than 80 in service or ordered.
Unlike Bombardier, Embraer is a complete public company. There are no families or government interests defining their strategies. They move always following the market. For this reason, most of the company has already moved to US. All business jets aviation is already in US. Great part of commercial aviation is in Europe. It is a mistake to think that Embraer is a purely Brazilian company.
Oh, and I forgot to mention other important thing: more than 50% of the E2 program is owned by Pratt/UTAS and Honeywell.
Trump is always complaining about the US Trade deficit. Boeing is one of the largest US exporter. Other countries will react on this stupid decision by the US government. This will hurt Boeing and US exports badly. The Trade deficit will grow.
I guess the US government is even stupid enough for the next step: sanctions against the gulf airlines because they are allegedly subsidised: Because America first. US Airlines first. The gulf airlines account for 50% of Boeings wide body orders. Then Boeing can scrap the B777X.
Think the 359’s and 35K’s would have served the ME airlines well but they order 777X’s because they know if the US make it more difficult for them to fly to the US the 777X program will be dead.
Which is akin to:
‘Think the 77W have already served EK well but they continue to order 380 in bulks because they knew if the EU made it more difficult for them to fly to the EU the 380 program was already dead.
“Trump is always complaining about the US Trade deficit.”
Which contrast sharply with the fact that the U.S. enjoy huge trade surplus with Canada.
May be Trump also complaining about not enough U.S. trade surplus with Canada and extinguishing aerospace imports fm Canada is 1 way to widen that surplus?
In the Trump admin world, winner takes all and win-win situation is not allowed….
No, that’s not true.
US export (in goods) to Canada in 2016: 268 billion USD.
US imports (in goods) from Canada in 2016: 278 billion USD.
In the last 10 years the US had a trade deficit with Canada every year and also in the first 7 months of 2017 there is a trade deficit (162 vs. 173 billion). But the trade deficit was much higher 10 years ago.
I don’t know the numbers for the current account balance, which includes services, foreign investment and so on.
U.S. trade surplus/current account balance with Canada include all “services , foreign investment and so on” with banking/insurance and telecom/IT services as the biggest contributors….not just manufactured goods.
Is what we see here the long time established way of public litigation in the US ( bring up a wide spectrum of more or less trumped up charges loaded with a massive, over the top sentence ) and then go for a negotiated judgment that offers a magnitudes lesser penalty for a guilty plead?
( IMU an MoO as used in a judicial system shows it to be broken by design. )
Objective: bring up precedence for “dumping”. This then will be leveraged against other manufacturers ( prob. Airbus, but not as a direct follow up.)
The final termination is December 12, in the mean time Delta has to make another decision on and order for 75 larger single aisles by year end.
Was this part of Boeing’s plans to keep the CS300 (CS500?) out of it and/or make sure Airbus can offer a low price?
Basically forcing Delta to buy Boeing, nice company, that Boeing.
“Was this part of Boeing’s plans to….make sure Airbus can offer a low price?”
U’ve got it upside down re your speculation.
If Boeing hv such plan, the objective will be to ensure Airbus, as a foreign producer, canNOT legally offer a low price to bid for the DL contract against Boeing’s own bid.
I doubt the foundation of such theory because Airbus Alabama is already a U.S. domestic producer of narrowbody aircrafts just like Boeing Renton.
But what is Delta going to do if the CS1/3’s are tariffed beyond economy realities?
Forced to buy MAX7’s offered at $30M?
Then Boeing got its way.
“But what is Delta going to do…?…Forced to buy MAX7’s offered at $30M?”
Or buy 319Neo @ US$20m if DL somehow managed to convince Airbus Alabama to accept such low price.
Either way, no tariff/import duty issue risk in the equation.
FLX you are the technical guy, know you just don’t glue on any engine on any aircraft.
But the PW1100G’s are heavy (2.86T) and have aerodynamic disadvantages (81″). What will it take to get the PW1500G’s equivalent (2.18T/73″) on the 319, the highest thrust version 23/24KLb should do the trick? (Maybe drop the MTOW/Fuel capacity/range by a few percent).
There could be an agreement between AB/BBD/PW that this aircraft will only be marketed in the US if the whole CS story goes belly up in the US?
“…you just don’t glue on any engine on any aircraft.”
No U don’t but so what?
“But the PW1100G’s are heavy (2.86T) and have aerodynamic disadvantages (81″)”
They are but there are 2 problems U probably forgot:
1st of all, should be pretty obvious to U that any additional op cost fm those weight & aero disadvantages, even over the lifetime of the 319Neo airframe, would never match the increased CS1 acquisition cost due to those magnitude of tariffs.
2ndly, net fuel efficiency for the whole airplane system is not only about engine weight & drag. Max7 is not much more efficient than 319Neo, if at all, thx to such small fan diameter(even the CS1 has a larger fan) and far lower by-pass ratio @ 9:1(12.5:1 for PW1100G, 11:1 for Leap1A @ below 3.0t weight).
“What will it take to get the PW1500G’s equivalent (2.18T/73″) on the 319…?”
Don’t worry about that as it’ll never happen. Too costly to redesign, redevelop and re-cert that engine+airframe integration/combo precisely because “you just don’t glue on any engine on any aircraft” ……especially for a production run of only 75frames similar to the DL+BBD deal re CS1.
The best option for Bombardier raise the middle finger to Boeing would be be to launch the CS500.
And source equity partners to share in the program.
An option is for BBD to sell X% of the CS program to refund a portion the development money of the CS to the Canadian Government to a level that it can’t be regarded as unfair Government support?
Then move on and develop the CS5.
“An option is for BBD to sell X% of the CS program to refund a portion the development money of the CS to the Canadian Government”
1st of all, there’s no such thing as a “refund” by BBD to the Canadian gov’t. Gov’t bought shares in the CSeries program and it became ‘CSeries company'(so to speak) and the $ went to support all aspects in running the CSeries including but not limited to R&D. If the CSeries company is bankrupted, gov’t suffer total loss in that investment. Also, the decision to sell or not to sell their shares in CSeries company is totally upto shareholders known as gov’ts of Quebec & Ottawa….BBD has no say in such decision.
I suspect U didn’t even know basic stuff re CSeries program such as gov’t already owned shares in the CSeries JV jointly with BBD b4 U contributed your “option” for BBD.
2ndly, where to find non-gov’t buyers for those shares in CSeries company? If U think BBD had not tried b4 they ultimately asked Quebec & Ottawa, U hv a lot of catch-up readings to do….
“Then move on and develop the CS5”
May be U are the one who should move on and abandon the unrealistic dream/idea that BBD will develop CS5 any time soon b4 survival for the existing CS1 & CS3 are more assured.
Now I know.
So whats the solution?
“So whats the solution?”
U honestly think anyone, including parties directly involved such as BBD, DL, Canada/U.K. gov’ts, Boeing, Trump admin, etc., can answer your question @ this stage?
But as a start to speculate a reasonably realistic outcome(s), I would try the following 1st @ the minimum:
1. Re-read(assuming U hv already) options discussed in the 2 weblinks within Scott’s story under ‘Shocker’ section.
2. Read & understand more background info in general so hv a good idea what hv been tried already upto now.
They already did that once and found partners fm gov’t of Quebec and Ottawa(may be N.Ireland too)….
The current CSeries program is technically already a JV company jointly owned by BBD and gov’t.
If the CS falls, the Belfast plant could, then Ms May falls and then Brexit could fall.
Is the US (Mr.T) for or against Brexit? Could be some bigger picture stuff going on here?
Trump, being the protectionist he is, loves Brexit.
He infamously landed in Scotland and proceeded to congratulate “you English” for voting for Brexit… completely missing the irony that 1) the Scottish voted to remain in the EU and 2) the Scottish melt hate being called English.
Should be “absolutely hate” – stupid mobile interface…
Wonder if he thought about that one.
…or he wants Boeing to take over BBD?
Got a feeling something else is going on here….?
Were I an airline CEO/CFO, I’d take this personally and holistically, and consider who I do business with in future.
A poor and petty showing by Boeing. New aircraft models and large orders are heavily discounted… The Max7 is a non-optimized non-starter… Franken-mini.
Good luck Bombardier. Maybe another airline will pick up the slack, if indeed the case is won. GRRRR 🙁
Trump fingertips all over the decision. He is doing what he can to prevent what happened during many years when US governments have neglected the industrial base of America. Expect some huge Boeing deals in China in the coming years. I won’t be surprised if the huge advantage Airbus enjoys now in China created under the dormant eyes of previous administration , is flipped in the coming years. After all they don’t want a nuclear explosion near their border with North Korea. I advise everyone here to read the excellent book on China by Henry Kissinger. The Chinese are very practical in their dealings with foreigners as long as you honor their values .
“The Chinese are very practical in their dealings with foreigners as long as you honor their values .”
And President Trump is just such a character?!
I have read that book and everything Trump has done so far goes against anything and everything gleaned from it.
Not to put too fine a point on it – Temp is a selfish bully who believes (and convinced others to believe) that he has some amazing business sense when it’s all been privilege, luck, PR and others people’s money.
Acting like a [Edited] has got him to be president but I have a feeling that because he’s in the spotlight most people now see him for what he is. His lying and bullying won’t work when he doesn’t impress the rest of the world.
Trump, I mean Trump!
Man, this phone is retroactively editing my text, I swear…
I write in three languages on this one and it sends me crazy. What idiot named these things Smart phones?
This should make the US Government and Boeing happy, “BBD bonds tumble”. Who is causing the damages here?
Boeing holds all the cards, I have yet to read any effective countermeasure.
If I understand correctly, Delta can’t cancel the contract. Is that right? Then the only option then is buying the planes but not importing them. Even then bbd has all sorts of clauses to prevent them being used over certain distances etc. So how about Delta renegotiating the deal and selling the aircraft abroad? If Delta can’t make a profit, then no one ever will on the Cseries. Bbd solves their cash flow problem and could probably get a bit more for each plane.
Airbus is next in line.Boeing PR agency Lexington says Trump is going to demand compensation for lost US jobs.
“Boeing PR agency Lexington says Trump is going to demand compensation for lost US jobs.”
Is that same agency even aware that Boeing hv just signed a contract with Comac to jointly invest, including new jobs, in a JV 737 completion center in China? That will logically trigger Trump going to demand compensation fm Boeing for lost U.S. jobs @ the existing Renton/Boeing Field completion centers.
Unless logic does not apply for the Trump admin and selective enforcement is the real name of the game.
And the biggest fear is not about guarding against “lost US jobs” which is reasonable fm U.S. voters perspective. It’ll be truly scary if it’s really about lost Boeing jobs….even @ the expense of lost jobs @ Airbus Alabama, i.e. systematically favoring 1 domestic employer over another.
Is Mr T going to sue who for the lost jobs that this CS ruling could cause in the US?
To be fair, the Trump admin is clearly creating a lot of jobs in the litigation/legal sector(And possibly PR services sector too) due to this trade dispute though…….
No wonder for decades, I hv been hearing the U.S. will eventually hv more litigation lawyers than product development engineers…..wait, may it is already.
Just to get one thing clear in my own mind, assuming the 220% is the final number.
Is this rate set “in concrete and steal” for all future purchases of the the CS1/3’s? If Jetblue pays $50M for an CS1 they will have to pay $110M to the US Government?
If so, “Delta Canada” buys CS1’s from BBD for $50M and they sell it to Delta (US) for $1M they will have to pay the US Government $2.2M?
And these lawyers need to get paid, form tariffs that’s imposed?
Looks like it. Anything is better than paying $Billions to the US Government.
Not sure if this is correct, if Delta goes threw with the deal as is it will be $20M to BBD and $44M to the US Government per aircraft, thus effective unit cost to DL $66M?
If BBD can secure an order/s in China or somewhere else for 75 aircraft for say $30M each they win, the new buyer/s still gets a bargain and let DL pay a $1 cancellation fee.
“…the deal as it is will be $20M to BBD and $44M to the US Government per aircraft, thus effective unit cost to DL $66M?”
U obviously missed the full content in Scott’s story/press release re total tariff.
That $44m is only for the ‘countervailing’ duty (a.k.a. ‘anti-subsidy’ duty). Similar amount on top of that $44m is expected for the ‘anti-dumping’ duty to be announced nex wk.
Yes, effective unit cost for DL to import every CS1 will approach $108m which is practically the list price for a Max8….and no customer is actually paying anywhere near that list price for Max8 in the backlog.
Only number to work with at the moment.
Almost a better deal for DL to pay $20M each and donate it to the Canadian Air Force for target practise?
Using it for starting its own code sharing LLC, “Delta Ireland”, based out of Belfast, will most likely make more sense than using it for target practise?
DL control Virgin Atlantic. I have been wondering if they might end up there somehow. A new Irish registered, to avoid Brexit and taxes, operation out of UK using C series would get a poitive response from UK and probably Ireland. If successful it would also depress a certain big Boeing customer.
Its a wonderful world we are living in, never know whats next.
At least Boeing is consistently behaving the way they do, ……….!
Great news for Boeing. I’m continuing to guess this is setting up for final assembly to be announced for NMA in Charleston.
I don’t think they’ll have room for NSA as well there, however, so Washington will continue to get narrowbody (functional) duopoly production down the line. 779 will be around for another 15 years, so IAM751 should be ok mid-term.
Obviously Boeings management isn’t interested in keeping people employed, in fact the opposite is true. But they’re not stupid, this has all been carefully planned. About a year ago adverts started to appear in the UK that featured some of the tiny number of British Boeing employees, at about the same time as they announced a token factory in the UK. Boeing are still a few steps ahead of us, I can’t work out the plan, it just seems like madness to me.
How about stripping out some tankage to bring down the range below the carefully selected 2900 miles?
September 26, 2017
I still do not see what they are trying to achieve over anything but the immediate short term. All they have done is create an environment that is far more hostile in terms of:
1 foreign govts eg Canada, Britain, Europe
2 alienate potential purchasers
3 lose lucrative defence deals
4 be seen to be the ‘bully’ by many wider parties
5 potentially forced BBD into a suitor with greater resources be it Airbus or Comac
6 called in all its federal govt chips when it may well need them in the future
7 highlighted the quality of the Cseries
This game is highly likely to backfire on Boeing from so many angles. The only real win is if BBD goes pop and ceases to be and that will never happen, at least not in a clean and clinical manner.
As the market leader Boeing has certain ingrained advantages but also certain ethical obligations. By ignoring those obligations and fighting in the sandpit with the little boys Boeing is demeaning itself and losing the inherent credibility of its position. Reputation is hard won and easily lost, in my view whatever the outcome Boeing loses over the medium term.
If BBD Pops it somebody will buy the C series, and it won’t be BA, not enough loose cash after buybacks, KC-46A/787 screwups. A china owned C series, even if still built in Canadá, would result in such a tech transfer I doubt if BA would survive, and AB would need a lot of support.
Is it possible for Bombardier to offer the US market a CS100 lite variant with sub 100 seats. This may require amendment of the Type Certificate. The CS100 could then be imported into the US avoiding the imposed tariffs.
This CS100 lite variant can then be modified to a regular 110-130 passenger configuration in the US through an FAA Supplemental Type Certificate.
The only problem I see is the initial importation of the aircraft. What the owner or subsequent owners wish to do with the aircraft should not be subject to tariffs.
“100 – 150 seats std capacity, regardless of the actual number of seats”. They’ve thought of that one.
Delta has been very quiet.
If they were hard balled they could sue for damages, lost of income etc, if Boeing cant supply an aircraft with the CS100 specs within the required time frame.
Seating, seat mile cost etc. (108 seats as per spec). Maybe Boeing will have to buy the CS100’s off BBD and supply to DL?
In hindsight if this tariff makes selling the CS-family in the US virtually impossible it could give the Canadian Government bodies and other interested parties a near blank cheque to support the CS program and “fight” Boeing outside the US?
So long live the CS.
And apply a levy of 50%, based on list price, as from 26 Sep 2017, on all US designed aircraft between 100 and 400 seats to develop the local aircraft industry, this payable by the manufacturer.
First comment I see from Delta after the ruling.
Is this going to be sorted out on the golf course or at 45000 feet in a private jet?
This decision does nothing to hurt Bombardier because there are so many ways to avoid these charges and I’m sure they will fight the decision on appeals virtually forever! So much of the C-series work is done in the USA, including the engines that this ruling makes no sense. This does great damage to Boeing and international trade! Many foreign nations are going to be wary of Boeing filing similar actions against them. The fact that Boeing makes these unfounded allegations against our nearest and closest ally and trading partner is shocking, especially in light of the huge tax breaks and very favorable government contracts Boeing receives!
If you look at US imports vehicles must be next.
The Aluminum and oil imports of the US from Canada is significant and could give some leverage to Canada if talks get tough.
Interesting news if true, Qatar buying Alitalia. Could rattle a few cages in the European airline business.
The article you linked to says that Qatar is buying a 49% stake in the holding company for Meridiana, which is a different airline than Alitalia. Also, there is a significant difference between “buying” and “buying a 49% stake”.
Thanks AP, I didn’t look at the details, looked a bit vague to me. Could be interesting if Qatar is trying to get a foot in the door for a base in Europe.
Their Indian airline ambitions went quiet, if they can pull that off they could be strategically well placed.
AP you put me on the right track. Below a link that is setting the scene well. Also something in there about NAFTA talks and the CS story.
Interesting that Meridiana’s 100% owned subsidiary, Air Italy, has an operating license to fly from Italy to the US.