Post-hearing briefs in Boeing-Bombardier trade case

Dec. 28, 2017, © Leeham Co.: It’s not often that levity appears in briefing papers in US government trade cases, but Delta Air Lines managed to draw LNC’s chuckle in its post-hearing brief in the Boeing-Bombardier trade case.

Dec. 27 was the deadline for Delta, Bombardier, Boeing and other interested parties to file post-hearing (Dec. 17) briefs and exhibits.

Delta’s introduction was novel to say the least.

Prepare for landing

Delta’s opening paragraph:

The pre-landing checklist for this investigation is simple to complete: no US produced LCA options for airlines seeking 100- to 110-seat aircraft; no lost sale from the Delta campaign; no lost revenue from the United campaign; no subject imports during the P0I; no US commercial shipments; and no imminent subject imports. Each of these facts support a finding of no threat of material injury. Collectively, they compel it.

Hundreds of pages in briefs and exhibits were filed by the parties. Below are links to PDF documents.

Delta Air Lines

Delta Air Lines Brief: Delta Post Brief 122717

Delta Exhibits Part 1: Delta Exh Part 1

Delta Exhibits Part 2: Delta Exh Part 2 122717


Boeing Brief: Boeing Post Brief 122717

Boeing Exhibits: Boeing Exh 122717


Bombardier Brief: BBD Post Brief 122717

Bombardier Exhibit: BBD Exh Post Brief 122717

25 Comments on “Post-hearing briefs in Boeing-Bombardier trade case

  1. Regarding: “no US produced LCA options for airlines seeking 100- to 110-seat aircraft;” in Delta’s opening paragraph.

    Below is part of Boeing ‘s written response to a question about this issue that was submitted in its post hearing brief (see the page the with the number 40 which was the 65th page in the PDF posted by Mr. Hamilton when I viewed it on my computer).

    “Questions from Commissioner Williamson
    16. Delta claims that you didn’t lose the sale to Bombardier because they wanted 110-seat aircraft. And that Boeing doesn’t make anything in that range. And so I’m really questioning how do you respond to their claim that you really didn’t lose it because you didn’t make anything in the size range that they particularly wanted‘?(Tr. at 73:13-2)

    But I think the question I’m raising, because in a sense Delta almost implies it, there’s a 100- to 110-seat category which I guess can be serviced by Embraer, maybe moving up-so that’s the question I’m asking. If Delta says I want a 100- to 110-seat aircraft, you don’t have one. (Tr. at 74:12-17)

    As an initial matter, it is important to clarify that Respondents have tried to obscure the importance of the CS300 in the 2016 Delta sale. If Delta cared only about l00- to 110-seat aircraft in its deal with Bombardier, Delta would not have negotiated for the rights to end up with a C Series fleet composed overwhelmingly of CS300’s. Yet, Delta’s deal with Bombardier does exactly that – Delta can to take 90 CS300’s out of the 125 total firm orders and options it obtained. Moreover, Delta CEO Ed Bastian has stated that “Delta is ‘very interested’ in the CS300 and has agreed to ‘firm pricing’ with Bombardier on the larger C Series model (178). Accordingly, other U.S. customers must demand pricing from both Bombardier and Boeing that
    enables them to compete with Delta operating low-priced CS100’s and low-priced CS300’s.”

    • Weight,operating costs,passenger comfort,which engine suits your maintainence arm,family commonality,etc,these are all things for the customer to decide on,not Boeing.
      Delta are ruining their own argument by concentrating on the CS 100,the CS300 and 737/7 are completely different planes.If it was just about price Delta would have been delighted to have invited Boeing to tender.

    • How does this address anything?

      Boeing is gonna tell Delta what they actually wanted? Where is the paperwork that Boeing has where Delta and is purchasing planes above 110?

      Like, people can’t keep their options open anymore before the future date they actually have to buy? Keeping options now constitutes a sale actionable in a court? Where did Boeing’s execs go to business or law school. You can keep you options open? In the world of nationalist zealots running the government to the ground reaching for straws thing they can hold. …

      Any CEO can do puffery this is standard in commerce and means zilch, “Oh, I am interested in this aircraft?” This what Boeing has? If they had a dollar every time a company exec said that about one of their planes they would own Canada. Gimme a break.

    • Thanks for the links Scott, thought of working through them but sure AP will give us good summaries.

      You don’t need to be a rocket scientist to work out that this complain is to protect BA’s ambitions with Embraer and the MAX7 from the CS300.

      BA must obviously have its eye on AA’s replacements for its aging fleet of 125 A319’s. The CS300 most likely the “perfect” replacement for at least 50% of these.

    • To which Delta responds……

      “B. The CS300 Is Not at Issue Here
      While Boeing’s submissions have almost universally directed the Commission’s attention
      to the “C Series,”44there is not a scintilla of record evidence of imminent imports of the CS300.
      The only allegation of future import Boeing has made is about the CSl00. Delta entered into a
      purchase agreement for 75 CSl00s. While the purchase agreement includes options for CS300s,
      purchase agreements in this industry nearly always have options for other aircraft.45While
      Boeing has insisted that Delta could exercise its options and purchase CS300s at some future
      date, this is pure speculation.“

      • It is one thing to claim the obvious, another to have have evidence to back up your claim.

    • B. Thinking seems to be that making an offer, even if unsuitable, and being denied is enough to show damage.
      No thinking processes beyond “self centered”.

  2. Boeing complained that they had to drop the price of the 737-700 to absurdly low levels because of the threat coming from the C Series.

    It now looks like the Boeing sales team got badly played when United switched to the 737-800.

    • Looks like a fake competition to me.United must have either negotiated a price for the 737-800 or renegotiated the price independent of bombardier (or for that matter Airbus)

        • @Anton: For the benefit of readers, can you point to the page you refer to regarding Frontier A319s?

          • On page no. 8 & 9 there is reference to Spirit and Jet Blues interest in the C-Series.

            On page 14 reference is made to Republic holdings keeping the C-Series and Frontier the 319’s, material damage if Republican takes the C-series.

            There is also a cross reference to Tr at 125:7-11 (which I still try to find) implying material damage was suffered from the A319 order resulting from the CS-A319 “package” deal (with Republican at that time) for aircraft now going to Frontier.

            Thus the 319 order an indirect damage as a result of the overall deal “that may result in a claim”.

  3. Ed Bastian as Delta, one of the US3, had a responsability towards the Market : to give BBD – under intense care – the life-supporting oxygen upon which survival depends. Even assuming hypothetically that C Series would compare unfavourably vs a competing model (which ?) offered by Boeing, Delta shall not be held faulty but shall be saluted for its wisdom and sense of leadership duty to have elected to give newest market entrant challenger BBD the relief of a US3 approval at a critical time, supporting the woe-ridden C Series.

  4. Just scanned through Boeing’s post-briefing (whats left of it). I can use some unsocial words, for me it puts Boeing in box and on it is written, “pathetic”. One thing is sure, they bloody scared of the CS300.

  5. From the Boeing post hearing brief:

    “Bombardier’s concessions—and powerful record evidence—have made the
    Commission‘s final determination straightforward. The C Series competes against the 737-700
    (the “-700”) and MAX 7 and no other Boeing airplane. Bombardier has illegally dumped its
    heavily subsidized airplanes into the U.S. at astonishingly-low, below-cost prices, This has
    materially harmed, and will continue to materially harm, the -700 and MAX 7 programs”

    If the CSeries competes with the -700 why did Boeing – in response to Delta’s requirement – only offer used Embraer Jets? In light of this fact it seems to me that the ITC has no choice but to rule no material harm was done to Boeing, if they rule otherwise then the process is a farce.

    • Well we can’t take Boeings used aircraft market away form them can we?

      I mean its a massive part of their business!.

  6. Everything seems to be pivoting around “material”, what is the definition of material in this case. In my line of business material are “things” that could impact revenue, profit, share value, etc. with >10%.

    The 737 have ~4500 outstanding orders, 75 units is <2% by number and not much more than 1% by value using -700/MAX7 prices?

    ….and The bigger picture, BA's share price has doubled since DAL's CS100 order.

  7. See DAL is obliged to take delivery of the CS100’s, if the ruling is in favor of BA what are DAL’s options?

    See AeroMexico (49% DAL) is looking at CS’es, also Westjet and DAL in talks, some plan-B happening in the background?

  8. In my mind, even if a US rail operator bought 100 Bombardier train-sets, Boeing would still have complained under it’s obsession to destroy an Embraer competitor.

    • Perhaps. If Bombardier “dumped” 100 trains into the US, rail travel would become cheaper, therefore increasing it’s cost competitiveness with air travel, therefore taking customers away from US airlines flying Boeing aircraft, thus reducing the need/number of Boeing aircraft. I could see how Boeing could make a case out of it.

  9. It’s really a riot that DAL, formerly “queen of the junkers” (“let’s buy us some more mad dogs!”) under former ceo “let me trash talk Boeing again” Anderson, is now caught up in new aircraft acquisition! Is this really a new trend for Delta under Bastian? And I’m guessing “how do you like me now” Anderson’s having some bad karma these days with his choo-choos.

  10. From Boeing’s post Briefing its clear that BA wants to protect the MAX7 as its future, or lack thereof, “will impact on Boeing’s ability to offer and entire 737 range/family of aircraft”.

    There concern is not the DAL’s CS100 order but there option to convert to CS300’s which competes with MAX7’s. Whats US airlines options, get forced to buy MAX7’s or E-195E2’s?

    The 319NEO’s main problem is that the LEAP1A and PW1100G’s are an overkill in thrust capability, high weight and drag for a relative small aircraft. It’s OEM is also not much less than that of the 320.

    An 319NEO with a 73″ fanned PW1x00G2 (23KLb) could make the 319 potentially interesting for US airlines if the CS gets blacklisted and others that wants to retain fleet commonalities. It is however clear that BA have its knifes out for the 319.

    With the “huge” sales of the 320NEO another option for P&W and AB is to develop a new family of ~77″ fanned PW1000G’s, with a max thrust of ~27KLb for the 320, this will have weight, drag and SFC advantages over the PW1100G’s. If this could coincide with an updated wing for the 320 it will really become a very nice aircraft, especially if it incorporates CS-cockpit features.

    This will also reduce the urgency or requirement to develop an CS500 in the medium term.

    • I really would like to know what 737-7 future.

      Sure no orders to back that up.

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