Jan. 26, 2018, © Leeham Co.: The decision by the US International Trade Commission that Bombardier did no harm to Boeing with its sale of 75+50 CS100s to Delta Air Lines is a shocker.
The UK and Canadian governments thought Boeing would win, as it had at the US Department of Commerce. Observers and media, including LNC, were unanimous in believing Boeing would win. Bombardier did, too—already filing notices at the World Trade Organization and NAFTA to contest Commerce’s stiff tariff decisions.
With a 4-0 decision by ITC that Boeing suffered no harm, two questions arise:
What happened, and What’s next?
At this writing, we were still awaiting an anticipated press release to be issued hours after the ITC announced the vote. It isn’t to shed more than a little light on the decision. But the full reasoning may never be known to the general public.
Commerce will get a full copy of the decision around Feb. 9, an ITC spokesperson tells LNC. This contains all the commercially sensitive information provided by the parties in this case. Their lawyers should get the document at the same time.
The public version, redacted of the commercial information (which is all the good stuff), will become available around March 2.
The four commissioners who voted pre-date the Trump Administration. Three were appointed by President Obama and one by President George W. Bush. The latter is described as a pro-US industry commissioner. Voting against Boeing is characterized as significant.
William Perry is a trade attorney with the Seattle law firm of Harris Bricken. He previously worked for the US ITC and Commerce on trade cases. He correctly predicted Boeing would prevail at Commerce. He also predicted Boeing would win at ITC.
Until he sees the redacted decision, Perry can only speculate. But the fact Boeing didn’t offer the 737-700 or 737-7 to Delta and told the airline it wouldn’t have had delivery slots available until 2022 may have been the key, Perry says. Delta wanted deliveries beginning in 2018.
Boeing offered Delta 19 used Embraer E190s, which Delta purchased, and used 717s, but there weren’t enough of these to satisfy Delta’s needs.
Perry said he was “stunned” by the decision and termed it “very unusual.”
Boeing has 30 days to file a notice of appeal to the Court of International Trade (CIT). But the likelihood of success is said to be small, says Perry. The CIT rarely overturns the ITC, he said.
An appeal to the World Trade Organization through the US Trade Representative isn’t procedurally possible, Perry said.
In the meantime, Airbus and Bombardier officials were in Montreal today discussing integration issues of the former’s agreement to acquire 50.01% of the C Series program.
Officials at Bombardier and Airbus told LNC in advance of the ITC ruling that they plan to proceed with the Alabama C Series Final Assembly Line.
Here is a news release that the USITC issued this afternoon. I believe that this may be all they will be saying today.
January 26, 2018
News Release 18-015
Inv. No. 701-TA-578 and 731-TA-1368
Contact: Peg O’Laughlin, 202-205-1819
100- to 150-Seat Large Civil Aircraft from Canada Do Not Injure U.S. Industry, Says USITC
The United States International Trade Commission (USITC) today determined that a U.S. industry is not materially injured or threatened with material injury by reason of imports of 100- to 150-seat large civil aircraft from Canada that the U.S. Department of Commerce (Commerce) has determined are subsidized and sold at less than fair value.
Chairman Rhonda K. Schmidtlein, Vice Chairman David S. Johanson, and Commissioners Irving A. Williamson and Meredith M. Broadbent voted in the negative.
As a result of the USITC’s negative determinations, no antidumping or countervailing duty orders will be issued.
The Commission’s public report 100- to 150-Seat Large Civil Aircraft from Canada (Investigation Nos. 701-TA-578 and 731-TA-1368 (Final), USITC Publication 4759, February 2018) will contain the views of the Commission and information developed during the investigations.
The report will be available by March 2, 2018; when available, it may be accessed on the USITC website at: http://pubapps.usitc.gov/applications/publogs/qry_publication_loglist.asp.
Below are some quotes from a 9-27-17 Reuters article about the USITC that I previously posted a link to back in September or October 2017, including some quotes from former USITC Commissioners. Most people who post here did not want to believe back then my suggestion that the USITC was not a kangaroo court. See the link after the quote for the full story.
“Little-known U.S. trade commission faces test in Boeing-Bombardier case.
WASHINGTON (Reuters) – The best hope for shielding Canada’s Bombardier Inc (BBDb.TO) and its CSeries jetliner customers from massive trade duties imposed by the Trump administration is a little-known commission tucked away next to an expressway in Southwest Washington, DC.”
Text was skipped here.
“This should be seen in the context of an administration that really likes protectionism, so the higher, the better,” former ITC chairman Dan Pearson said of Commerce duty finding against Bombardier. “They decided to pile it on.”
Text was skipped here.
“It’s very far out of the norm. You’re deciding this case on the basis of zero imports,” said Georgetown University law professor Jennifer Hillman, a former ITC commissioner and World Trade Organization Appellate Body member. ”
Text was skipped here.
“The ITC is normally seen as immune from political influence, with a total of six commissioners who are equally split between Democrats and Republicans. However, the panel currently has only four members, who are scrambling to cope with a bigger workload this year.”
Text was skipped here.
“All the commissioners are seasoned trade lawyers appointed by former presidents Barack Obama and George W. Bush.”
Test was skipped here.
“Pearson, a trade consultant who recently left the libertarian Cato Institute, said the commissioners will hear arguments from Boeing that he believes will be “pushing the limits” of the ITC’s authority.”
One thing to keep in mind in the “What Happens Next Category” is that Brazil and Embraer’s WTO case against Canada and Bombardier remains active, although it will likely be many years before there is any definitive resolution. I don’ think that there is much doubt that the C-Series and E-Jets do directly compete. If Boeing acquires Embraer, it will take over this case?
True, although WTO cases are between countries, correct?
What does Airbus care if Canada exports to Brazil are hit with penalty?
They could possibly even sell Alabama C-Series to Brazil.
My assessment (for what it is or is not worth) is that BBD/Airbus now with the C Series are in a category of their own.
The E simply does not have the range or capacity to compete with the C300 (and I know that could be a separate issue)
I suspect B/A now would respond correctly to a case on the C300.
Frankly the E series is also in its own category.
Much like the oft commented comparison between the 737-900/9 and the A321CEO or NEO. It may be the closest but it certainly is not a competitor.
C100 and the Es do overlap at least in passenger capacity.
But if you are going to bust scope, then the more capable aircraft has a big leg up. You need to maximize the utilization if you are going to pay full tilt wages for a 100-150 seat aircraft.
A C100/300 fleet would trump a all E series fleet or a E/C300.
Delta has shown a serious commitment to that area with the 717.
United is making some noise in that direction.
I think more in question is can Airbus as a US registered company bring the same charges against Embraer/Boeing as Boeing did against then BBD?
If they are considered a US company then they would have a significant argument in regards to E Series vs at least the C100.
In the meantime’s Delta gets its jets and the rest of the US airline industry gets to see in country how it works.
Boeing blew it big time. Now they’ve suffered a massive credibility hit, the jets will get delivered, and Delta will (for the foreseeable future) likely stay away from any Boeing purchases.
And, oh by the way, Canada will definitely blacklist Boeing on military government orders for a while, in essence handing the Canadian military market to their competitors on a platinum platter.
Everyone could see that this was the wrong fight for Boeing to engage. I was rooting for Bombardier and I’m extremely pleased with this result. Boeing deserved to get kicked in the ball bearings for this one.
But Boeing said E Jets were not in the same category, as CSeries/Max 7, right? Bombardier even tried to bring this up in a Hail Mary when some Embaer executive said in a newspaper that the plane now has improved range.
It would certainly take on a Captain Ahab quality if Boeing were to continue the case as Embraer future owner.
Everyone’s best card right now is to settle, moving backwards slowly while facing the opponent eyes wide open, hands on the holster. Boeing maybe gets back their military contracts in Canada (as a pacifier), Trump gets to say he created jobs in Alabama. Airbus gets a program for a song. Bombardier learns about challenging the behemoths, and survives to reinvent itself.
The Canadian military under Trudeau is a JOKE. Next up for the RCAF: some ex-Australian AF F18 castoffs!
From what I can gather, a simple interpretation could be made that the early rulings were political; and this ruling was not. It would not surprise me going forward, if there are a few more twists and turns in the Bombardier CSeries saga. And for the good.
I think we can agree more twists. AS noted above, can Airbus claim as a US company that Embraer is harming it by dumping as well?
I think most of the rest is chaff but the C300 has not been adjudicated wither though it would seem BBD/Airbus would provide the data and not get an automatic ruling against them.
And will Boeing keep going at it like a bull dog or realize its lost a lot and gained nothing?
Well tickle me puce with a Sunday loofa. That’s a pretty wild result.
Airbus / Bombardier must be pretty chuffed. Boeing’s management are probably wondering how on earth they’re going to live this down.
Hopefully this will finally spur Boeing into waking up and getting on with a proper development.
(…and said so well 😉)
Keeping in mind Boeings management lived down loosing 20 billion 787 (the program should have cost 12 billion) and then went on a bent to kill unions, move jobs out of Washington sate.
The modern world is that way. I have never seen a manager no matter how bad and in some cases clearly mentally ill get canned.
Its all about money, shifting the blame, who they need to throw under the buss if the buzz gets too close.
I suspect they could have given the Byzantine or Chinese Empires lessons.
So we screwed up our sales to Canada for a lot of years. What is another 5 or 10 billion? I mean we know what a bench mark we can reach and still keep our jobs.
Management also made HUGE loss in December, in less then 24 hours, Boeing lost some possible $50 billion in contract (Delta decision to buy 100 Airbus planes, and Boeing lost a possible HUGE contract to sell 88 fighter jets to Canada).
I call that a mistake, I guess?
Tagging this as “loss” is intellectually dishonest.
You did not lose it. You never had it.
I don’t think there was any doubt that Delta was going with the A321. Delta used this the way they did the 787 vs A330/350, to play Boeing.
All the possibilities are out there as to why, but the bottom line is that Delta does not have a great deal of use for Boeing as an aircraft partner. The reality is they don’t.
The Canadian debacle would not have helped that, and the direct impact on Canada Boeing relationship going into the toilet does fall under their stupidity.
Its not intellectually or reality dishonest to say its a loss. At the least Boeing had a bridge order of 18 F-18s that would have sold. Add in the long term support and follow on to whoever got those latter?
Long term Canada will remember that so there are future losses to go with it.
And while Boeing does not care I do, Canada is a close ally and a good trading partner. No corporation should be allowed to sully those waters.
We will be rid of Trump one way or the other, Boeing we have to live with.
I think a lot of us will keep all that in mind for a long time to come!
Is it too early to consider an Airbus / Boeing merger? Because that’s where this is all ultimately headed. It may take a couple of decades yet, but I can see market conditions driving them together.
In 40 years, maybe if the Russian and Chinese became a real threat.
Otherwise and A/B monopoly would not be tolerated.
In 40 years time, who knows.
Many investors are fairly short minded these days, and aren’t interested in long term results. That explains a lot about Boeing’s books; they look good, ish, short term shareholder value is there.
I can’t blame the management of any company for keeping the shareholder value up during their tenure, it’s pretty much their prime job. And it’s not their personal problem to see that their successor has enough money in the kitty to do the same. Once retired and shares sold, they’ve walked away.
That’s why I think someone who has come up through a company from their very earliest years makes a good CEO. They’re much more likely to live the company than an outsider. I can’t see William E Boeing having been content to bash out the same old rubbish decade after decade.
What I don’t understand is why so many investors are content for companies to make a mess of things big time in one area of endeavour, thereby missing out on some juicy revenue, so long as the shareholder value is good. Almost no one is interested in determining whether or not it is as good as it could have been.
Google is just as bad; they’ve missed on the Chinese market, they’re going to miss out on the Indian and African market too (the Chinese will get those). They’re in danger of being legislated out of the European market. Yet very few investors seem to be concerned.
Money not earned through mangement cock ups is money that is not in shareholders’ pockets thanks to that mangement failing. Boeing have risked some quite important large orders through this ill-starred venture into international politics. You’d think that there ought to be some kind of come-back for that.
No matter. I suppose this kind of managerial approach does leave Boeing vulnerable to an activist investor.
“I have never seen a manager no matter how bad and in some cases clearly mentally ill get canned.” TW: At a nameless aerospace parts company (one of the three or four largest) we had a manager who cause at least five highly competent engineers and other staff to just up and quit. Finally, they (HR and the rest of management) took away all the people under him. But he still had the title of manager!
Isn’t it amazing that we are supposed to perform and when they do not at best its worked around.
Worst they just are allowed to go on and on.
If Boeing has the right plane for Delta, Delta will buy it. No grudges are held for a long time when money is involved and Delta has a reputation for holding out for the best price.
What happened is that Boeing’s presentation of distorted facts and half truths, in addition to the total nonsense of the DoC’s 300 percent tariffs, collapsed under scrutiny.
“Common Sense” could quite well have been an external forcefully applied “finish”. ( Ms. May giving the bag wielding Ms. Thatcher 🙂
Never underestimate the power of human lack of common sense.
We have just seen that in spades (the last election)
I never thought I’d say it. Thank God for the pilots’unions, and the magnificent scope clause! As re: the scope clause and those unions, see Comrade Stalin’s Order No. 227: “Not one step back!” LOL
Interesting that – albeit somewhat belatedly – common sense seems to have broken out like a rash in this issue.
Could it be catching? Perhaps too much to hope for.
Meanwhile there should be some (more) red faces in Chicago, but perhaps they are now inured or ridicule and no longer blush while changing feet in the mouth.
Now let’s get some of the Cs in the air around here!
I never saw a mention of the scope clause in the filings as a reason to differentiate the C Series from the 737-700/-7MAX. I doubt that’s the reason.
Ditto, this is about aircraft above the scope clause.
United is looking again to link up small communities I understand. it should be interesting.
You need to follow Scott Kirby’s comments on the CSeries:,”no interest”.
Indeed, it comes down to potential revenue (passenger travel demand) and operating COST.
Karma. Good to see that Karma sides on common sense. Boeing and its political cronies lost fairly and squarely. They don’t have have a competitor to the CS series.
Interpreting Perry’s speculation on the theories of the case: Boeing didn’t suffer a harm because Boeing was always unable to fulfill the Delta bid under Delta’s time frame. Boeing didn’t suffer a harm because it never submitted a bid and therefore chose not to compete for the order they didn’t win. The first reason seems to misunderstand how LCA orders are made and all buyers trade delivery and price and get in line for the product although I’ve lost cases because the judge lacked the technical background to understand my arguments (and lacked the insight to know they lacked critical foundation knowledge). The second reason strikes me as having a weak foundation. I found it strange that the record didn’t reflect Boeing submitting an unsolicited bid for the 737-700/Max even if it didn’t meet the technical terms of the bid. However, my reading of the filings indicated that Boeing suffered a harm when the good were sold below cost in the US not when Boeing bid and lost on the contract (because now any US airline could approach CSALP and buy airplanes without putting out a tender).
Rather then being non-political, I think you might have seen an even more political moment in the ITC’s ruling which was to prevent a full scale trade war with Canada (Britain, and the EU as well) on Canada’s deeply subsidized, vitally important domestic industry.
My prediction of the ITC’s ruling is that Boeing didn’t suffer a harm because 1) the 737-700 was out of production and the larger revised 737-MAX doesn’t fall into the defined category of 100-150 seat airplanes; or 2) the 737-700 is out of production and the 737-MAX isn’t in production so although Boeing had and will have a competing product it doesn’t presently have a competing product at the time of the Delta bid; or 3) the ITC rules that the CS-100 doesn’t compete with the 737-7MAX but the CS-300 does. Should Delta change its order from all CS-100s to any number of CS-300s, Boeing may refile its case. My best guess is #3 because Delta made a big deal about not wanting or needing the CS-300 while Boeing tried to paint the Delta deal as a CS-100/300 deal (its a CS-100 deal with a conversion option to exchange from CS-100s to CS-300s).
“… Canada’s deeply subsidized, vitally important domestic industry. ”
Aerospace is deeply subsidized everywhere, including the US. Only the forms of subsidy vary between countries.
And while every country would like to have an aerospace industry (see subsidies, above), the economic or strategic impact to Canada of even completely losing Bombardier’s aerospace business would be minimal.
As the 737-700 ( as well as the 800 and 900) are either in production or still offered for sale, I don’t see that.
It sounds like on a narrow ruling the C100 is simply not deemed to have killed non Boeing sales as Boeing did not bid the 700, it bid used aircraft. It could not make the aircraft be it a 700 or -7 on Boeings time line.
Failing to fill those seats looks to have left people with brains at the ITC.
Are there any ‘production slots’ left for the old 700/800/900 series. Boeing is quickly switching over to the Max and its not economically feasible to have the 2 types in production for much longer. Maybe a few could be accommodated but not say a 100 over 10 years.
The ITC commissioners noted that Boeing did not have an in production 737-700 which, along with the 737-7MAX were the subject aircraft of the injury claimed.
Last I checked, MAX models make up about 25% of total production.
As at the end of 2017, Boeing still has some 436 737NG to be delivered.
I have to applogies at least to AP
I re read the ITC setup and at most Trump could have put two commissioners in place.
One in the works (?) is a carry over from (re nominated) Obama nomination.
I guess our stable genius has missed out on the fact that those commissions matter!
“I guess our stable genius has missed out on the fact that those commissions matter!”
Is this guy (Trump) to be blamed for everything? I don’t like him that much but the constant pounding makes people go tor the underdog, like in the CS300 case.
I’m not arguing the point that all aerospace isn’t subsidized. I’m noting that Canada has a HUGE vested interest to take the US to the mat to protect a vital industry. Its worth the UK and the EU to gang up with Canada to protect a vital industry.
In most trade battles, you accept the court’s ruling, smooth things out behind the things, reinstate exports and move on. Here, the Canadian aerospace industry is huge, valuable, fragile, and worth sparking a trade war to keep all exports flowing.
Canada has put a lot into it and I don’t blame them for protecting their interests.
As a resource providing state, I can tell you that is not the way to the future.
I’m going to propose a very simple answer:
Bombardier had not imported a single aircraft into the United States. Under the Commission’s negligibility threshold, you can’t find as a matter of law injury if the target country represented less than three percent of imports. Bombardier’s 0.00 percent of imports certainly makes them negligible.
To top that off, Boeing’s order book is quite robust and losing one future sale doesn’t make one injured or really even threatened.
Lack of a causal connection.
You could be right. I was swayed by Boeing’s argument that the injury occurs at the time of the contract and that you are not required to wait until the harm is realized in order to prevent the harm. They quoted a lot of cases and it makes logical sense for the US customer to not be harmed by taking an orphan airplane then spark a trade war. I realize that not all law is about obvious logic.
I wondered about the extent of the tariffs proposed and whether the ITC could claw back the nearly 300% tariffs to a more realistic number. The numbers quoted was BBD sold airplanes to Delta at a $1M loss per plane, which doesn’t equate to a 300% tariff.
BBD can increase their offer to Delta by 1 million USD and send a “side” letter” to Delta saying that they will not have to pay this million.
Boeing used that trick when they offered discounts during 20 years and this was not accepted by justice. They canceled the accord and sent “side letters” … this way they got unknown the 20 years of exclusive orders from major US airlines including Delta (from memory) … it worked well
Garrett: The ruling did not seem to preclude a preemptive strike, though harm usually requires at least one impact.
However, If I am selling a 15 seat van, and the company I want to sell that van to wants a 10 seat van, you can’t simply claim that you have been hurt by a sale that you did not have a product in.
In this case Deltas terms of purchase clearnky precluded the 737(s) and of which Boeing had none to offer anyway (though you have to wonder where that 25 they sold to United went?)
As those were 700s, it looks like they would have been available and the 700-900 series is at least notionally still In production (800 and 900 for sure, they are still finishing orders). The tooling is there as are the lines.
The fact that Boeing could take 5 seats out of the van (118 seats in United configuration) , does not make it an optimized 10 passenger van. Its still heavy, its still long, it still has bigger engine and takes more fuel.
Obviously Delta knows the scope clause means it has to be under or it has to have an efficient specific model over that can make money with an above the scope crew.
Boeing defaulted its way out of the line, just as they would have if asked to supply a two seat trainer. They don’t have one.
The CS300 is another matter. It does nip at the 700/7 which is not selling either.
Boeing can probably bring a case again if and when Delta orders that. Likely to meet the same fate, maybe sooner as the more political arm can read tea leaves as well.
Opinions confuse, facts convince. If the data and calculations presented by Boeing is accurate, they should appeal the USITC’s decision. Otherwise, the issue is closed.
Often, many fail to accept that we live and operate in a capitalistic dog-eat-dog society where anything goes when it comes to business. Especially if it involves protecting or growing the bottom line.
If facts convinced, we would have a different President.
We have climate deniers and vaccine refusers despite the facts.
The norm is not fact driven. How the world works do not ask me. I continue to think its a looney bin that somehow functions despite itself.
The reality is that either Trump was lax in filling seats, or the Demos slowed it down.
Gulfing all the time has its drawbacks.
“Gulfing”, is that at all like golfing?
Sometimes I like my typos!
Again I have to apologize as I did not have my facts.
ITC was staffed with two unfilled right now. One is in the works.
That single one is a hold over re-nominate from Obama (Trump is lazy and spends a lot of time Gulfing)
Two Trump appointees would not have swung the decisions.
Due to their long tenure, they outlast a president or two depending on the cycle of appointment.
Pretty much immune and looks like trade geeks.
“Gulfing” is a different game.
It requires less stamina per game but likes repeats.
kissing some a* 🙂
Guffing – UK slang for meaningless words or hot air produced from either end.
Define “fair value” of an aircraft. What is the fair value of an A320neo or A350 sold in the U.S.? What is the fair value of a 737,787, or 777x sold in Airbusland?
This does not strike me as an exact science, more like lots of assumptions and broad speculation.
Every A320, A350, 737, 787, and 777x sold into a competitior’s territory meets some exact, measurable, open and universally agreed upon criteria that the CSeries didn’t? I don’t buy that.
Because then give us the minimum accepted “fair value” prices for these five aircraft? Figures don’t lie, but liars figure.
A fair value is a tad better than break-even for the customer. I.e. the airline makes money flying the aircraft bought over the time he/she owns it and can afford to pay dividents to stock owners higher than the interest rate. Not being able to do that, the price was above fair value. In “normal times” 63% of airlines looses money and destroy shareholder value.
Fair values it totally nebulous.
Reality is that a mfg need to make a profits to come out with new aircraft (or give back to the shareholders in Boeings case)
Kick starting a program can return fair value in the long term (and Boeing hopes so on the 787)
My mom called it wrestling the jello elephant.
Then again, if the airline really LOSES money, it and its shareholders are in a real “pickle”!
Will Canada forgive Boeing and put the Hornets back on the shopping list if Boeing doesn’t appeal?
Boeing’s statement was very combative and actually insulting so perhaps not. Eating a little crow would not have gone amiss.
With Trudeau, they’ll be lucky to get Hawks and pop guns! LOL
As a Canadian I hope Canada will not do any future business with Boeing. Boeing harmed our aerospace industry immeasurably. Even though in the end Bombardier “won” they were forced in the process to give away control of its flagship program to Airbus for a $1 – a program that they had invested billions in.
Instead of a “national champion” that walks in the market with a limp and has a well known inability to defferentiate between hope and reality you are in the game with a heavyweight that gets things right more often than not.
The CS100/CS300 platform / architecture / component set has a lot of a capabilities and growth in it to take it from an industry plaything to an industry player.
In the mass market SA market it reduces the OEW needed to do a particular job by about — from memory — 10% consequently it is in the game with a lot more credibility behind it.
AB now has a 2D SA game.
Legacy markets — do the same for less — CS platform.
Growth markets — do more for the same — A32X platform.
It has a 3D SA game if it wants to introduce a new product.
New Markets — MoM @ 75T OEW / out to 5400 NM — “Super Sixty” sorry Super A360.
Q + D — use the A320 fuselage.
Real money — use / copy the MC-21.
As a lover of Canada… I concurr. The whole event was foul… But look what you guys designed and built. Schitt’s Creek AND a beautiful airfradt.
Profile of c-series has been raised and higighted, it’s future is secure, and ‘airline’ fans have come out of the woodwork,
Boeing has tarnished itself and looks petty and frankly… Stupid.
It’s almost worth the whole silly, ill-advised endeavour.
I think Canada will be pragmatic, buy if you have to or have it in service.
but I think Boeing has done itself long term harm.
Sadly it harms Canada as well. Despite Us procurement issues, when it gets into service it tends to work well.
If you follow Australia travails with the Tiger Helicopter , its a prime example of how multi country procurement system do not work well.
If Canada buys Typhoon its going to be a shock.
It seems the Grippen NG would suit much better.
F-35, its a long way from being viable.
As a Bombardier shareholder and foreigner, Boeing turns out to have been the best thing to happen to Bombardier, a spectacularly badly managed company (the new team is trying harder) under the altar of “national champion” and all that. Maybe Canada/Bombardier are too small to play in that game they are trying? They ought to face facts in that company and distribute the parts to the right structure for scale if Canada ends up with control of a smaller piece that is self-sustaining and worth something, it is far better than owning a bigger piece that always has the hand out for taxpayer monies, and always on the edge of going under, taking all these jobs with it. The trains should be separate, the commercial aircraft should be separate, the private jets should be separate. And they should all be distributed to the right ownerships that have the scale, capital, and capability to manage each. All of these should not be in one company that is a lilliputian within the industries it tries to compete!
I think that is what has happened at least in part, C Series has been spun off and now owned by Airbus.
Kudos to United for recently announcing they’re “stepping things up”, and going “big time”. By starting to execute a quick, three year, sizeable ramp-up in capacity, they’ll soon be having Delta and AA pilots clamoring for “big boy” airplanes (‘37Maxes and 320neos).
CS vs B737?
Mod vs Trad.
Long legged, properly arranged NG engine install vs short legged, droopy drawers 60’s parts bin special with engines intakes that have to be re-profiled to gain ground clearance.
Cutting edge vs something your grandfather flew.
Not quite getting the vibe somehow.
Because you’re not an airline pilot. A/C size and gross weight “rule” re: routes and comp!
Delta narrow body pay (dollars per flight hour) according to Airline Pilot Central. Note pay is per FLIGHT hour, not work hour. The pilots have negotiated rates for some aircraft that Delta has yet to operate. A Delta pilot going from 737 or A320 to CS300 or Cs100 would be taking a pay cut.
Aircraft / Captain Year 5 / First Officer Year 5
757 / $260 / $167
A321 / $252 / $162
737-900 / $252 / $162
737-800 / $251 / $161
727-700 / $251 / $161
A320 / $242 / $155
A319 / $242 / $155
MD90/ $235 / $151
MD88 / $235 / $151
CS300 / $235 / $151
CS100 / $230 / $147
717 / $226 / $145
CRJ900 / $161 / $103
E190 / $161 /#103
Pay scale at Delta regional affiliate SkyWest.
Aircraft / Captain Year 5 / First Officer Year 5
CRJ900 / $79 / $47
CRJ700 / $77 / $46
CRJ200 / $73 / $44
Question for home study and reflection: Which of these airlines has low pilot turnover and an excess of qualified applicants?
Surely the gap is unsustainable?
Established rentiers vs the great unwashed.
How hard then is it to get a job with the Big 3?
Where does Southwest / Alastair fit into all of this.
Wall Street hate Big Auto, Big Oil, US full service airlines.
I now understand the last one.
Alistair = Alaska.
Dam predictive texting on a Japanese phone with a cheap West coast operating system on a UK network.
There must have been a flood of tears the day the last B707 retired.
Interesting contest – – pilot conservatism vs market / customer innovation.
The view from Red Clydeside. is that the middle class bus driving bonus hounds are pushing their luck.
Hello Fat Bloke on Tour.
Re: “Where does Southwest / Alastair fit into all of this.”
Southwest pay rates according to Airline Pilot Central. US $ per flight hour. These probably don’t matter much going forward, since Southwest’s current fleet of 707 aircraft includes 512 Boeing 737-700’s. Since I keep reading on this blog that these aircraft (72% od Southwest’s fleet) are uneconomic and uncompetitive, no doubt it must be the case that in the near future Southwest’s record of 44 consecutive profitable years will be broken and they will declare bankruptcy – right?
Aircraft / Captain Year 5 / First Officer Year 5
Choice of 737, 737, or 737 / $238 / $155
Was Alastair meant to be Alaska Air? If so, see below.
Alaska Airlines Pay Scale.
Aircraft / Captain Year 5 / First Officer Year 5
Choice of 737, 737, or 737 / $220 / $147
Virgin America pay scale
Aircraft / Captain Year 5 / First Officer Year 5
Airbus – ALL / $220 / $147
Personally – when getting work done on my house I usually don’t end up taking the lowest bid (for major work I will ask to view bidder’s prior work, and the quality of that work is far more important to me than bid price is), and when flying I tend to avoid the lowest paying airlines.
Meanwhile – at Frontier Airlines, 100% of eligible pilots voted in September of 2017 to authorize a strike if contract negotiations fail.
Frontier pay scale
Aircraft / Captain Year 5 / First Officer Year 5
Airbus – ALL / $141 / $87
From the article at the link below. Fly the friendly skies of Frontier.
“The two sides began negotiations in March 2016, the union said. A neutral mediator has been involved since October. Tensions were heightened last week when an arbiter in a different negotiation between the two sides ruled the airline was acting in bad faith when it failed to deliver on a 2011 promise to boost pilot pay once preset profit margins were reached. The strike vote was announced days later.”
“This vote shows the deep anger our pilots feel towards the direction set by our management,” Capt. Tracy Smith, chairman the Air Line Pilots Association’s Frontier unit, said in a news release. “We’re the lowest-paid Airbus pilots in North America, but that pitiful status is definitely going to change.”
At Spirit Airlines, whose pilot pay scale is similar for Frontier’s, 100% of pilots have also voted authorize a strike if contract negotiations fail. Both Frontier and Spirit are on my personal no-fly list, I have no interest in purchasing 28 or 29 inch pitch seats, on a plane flown by pilots who couldn’t make the cut at AA, Delta, UAL, Southwest or Alaska, no matter how low the cost of the ticket.
Spirit Airlines pay scale. US $ per flight hour.
Aircraft / Captain Year 5 / First Officer Year 5
Airbus – ALL / $136 / $90
Stoker on a diesel engine. 🙂
IMU what the pilot unions pushed seems to be less than functional.
This story will be taught in university economics over the next century. The story of a company with great and genuine engineering roots, morphed into a company of lawyers, accountants and deal makers.
Boeing of the sixties and eighties – the company that boldly and with pride, built the 747 and then the 777…. turned into the one that assembled the 787 and outsourced its soul. One that invited guests to view a hollow 787, held together with duct-tape and then had 3hours long speeches, along with backslaps.
This saga, where it shot itself in the foot by pushing two rivals together, only served to strengthen it rivals.
Is Boeing too big to fail? Maybe fail is too strong a word, meandering might be a better description.
Harvard Business Review case study for sure.
The HBR — story will be 5 years late, unreadable and written by a one club golfer pushing a hobby horse topic well beyond its relevance.
“The story of a company with great and genuine engineering roots, morphed into a company of lawyers, accountants and deal makers.”
not limited to Boeing as it is a Culture/Systemic issues.
Look at the now well established deal making culture in the judicial system. works the same way. All smoke and mirrors and how to subvert that “being equal unto the law” thing.
Be sure you get the kids to fit in BA’s stock price blowing through $300/share st the same time in the case study! LOL
Excellent News! With Mobile Alabama, CSeries partnership now set up for US destined CS300 and future Cs500 production. The 737-8 is now at serious risk. Plus a future A322 or A323 with a Bombardier carbon fiber wing will make the NMA case harder for Boeing. Really dumb opportunists in Chicago !
Jeremy: Boeing may or may not pull the NMA off. I call that an unknown.
The C series will have nothing to do with it.
They are not the same market.
This was mentioned a few weeks back on another thread, but maybe it bears repeating. McDonnell wasn’t that enamored with Douglas and the commercial side of the business. In fact maybe they let it whither on the vine. If Defense is supposed to increase as the Political folks think it may, then BA could, over time, as again some have suggested here, that it will become a wide body company. Oh boy, did that BA CEO protest building the MAX iteration. After Bombardier announce the CSeries, and AB the NEO, BA sulked and sulked. That CEO was so worried that investing in a new plane would cut into profits. He probably did his MBA thesis on how Pratt could save money by have the three engines built for the B727 in Viet Nam or Mexico.
With no tariffs and Boeing running scared of the CS, wonder how many US airlines will now take an interest in it?
Boeing’s stock will not tumble from this ruling. McNerney’s business school philosophy of “let’s just stick with updating old technology aircraft” after they spent 30 Billion making the B787, was too rigid and flawed. The next disciple of this philosophy at Boeing, the present CEO, added to this terrible business plan, the idea of using the courts to block innovation. If Airbus uses the CSeries NSA judiciously going forward, then Boeing is in for a hell of a fight that’s going to leave them in second place and costing them 10’s of billions of dollars to play catch up.
Agreed, Boeing is not going down.
Airbus however gets a great leg up and opens up a highly profitable sectors that Boeing can’t compete in.
Even if B and E make a date, its going to be 5 to 8 years before they can come up with a competing product. And at best it will match the C.
In 7 years, A and B can mfg 500+ C Series?
Market lock up.
The world is better off.
I wonder if Bombardier / Airbus made any provisions in there agreement for this happy but unexpected outcome?
It now appears that an Alabama FAL is no longer needed. Will they go ahead with this unnecessary investment? If so will they go after the State for some funding?
What about deliveries to Delta? Previous to this decision they were delayed until the Alabama FAL could be built. Now it seems they can take delivery from Mirabel! Will Delta revert to the original schedule?
The Bombardier / Airbus deal needs to be approved yet by the Canadian government and if it were up to me I would insist the terms be changed so that Airbus will not have more than a 50% interest in the program and I would insist the Alabama FAL be scrapped. Canadian taxpayers didn’t invest billions in Bombardier so as to create jobs in Alabama.
BBD can fight one global giant if it has the other global giant covering its back.
It cannot fight two global giants head on.
The CS platform cannot survive with just one model / CS100.
With AB on-side its volume doubles.
Is there space at Mirabel to put in another line?
US plant — assembly unit build CKD kits to use big Auto parlance.
Low rent plant making a big political and psychological statement.
If they don’t build the Alabama line(which they promised),they can never sell CS300/500 in the US
On what basis do you arrive at that conclusion?
Because Boeing will just dust off the complaints again for something which would be much closer to being a real competitor and would be classed as an Import.
Couldn’t they do that anyway when there’s actually been an Import or sale?Not dignified or fair,but that’s never stopped them.
FB on T: There are two models, the C100 and C300.
I believe Grubbie is right.
BBD had a second line in mind and I believe had tooling made or in producing for it.
They just move it to Alabama and start building it.
How that plays out with the trade issues is?
The C300 does at least to a more realistic degree tread on the 737-7 that will see so few sales and in only certain areas (Government) it is hard to tell what the ruling would be.
By that time the political climate is changed,. Maybe sooner.
TW @ 27th.
BBD on its own / no AB deal.
CS100 has some space in the market.
CS300 is up against two big selling aeroplanes from two determined manufacturers with a history of active cheque books if required.
Very tough nut to crack.
Up against one big seller as part of a SA tag team is a much better place to be.
What was the planned run rate — 10 per month by 2020?
Was that realistic and where are they now?
When do they have slots available?
AB gets new product and new production. BBD gets a helping hand.
Not sure what is being argued there.
Plan was 90 -120 aircraft by 2020.
Yes the tie in with Airbus is huge, one competitor gone as well as turned into an owner.
The Alabama FAL is needed.
Airbus had already seen the C series, realised it was a little gem of an aircraft, decided to try and get a piece of the action. Pretty good deal for Bombardier; they get more cake than they’d ever be able to deliver themselves.
Between them they can make the C series a much bigger program than Bombardier could ever have managed in their own. And they’ll need the Mobile plant to help deliver that.
Arguably the tariffs were the thing that pretty much sealed the deal. Without it BBD may have tried to go it alone.
From where I’m sitting it’s difficult to see nothing but positives for Bombardier, Airbus, and the people of Mobile. Good luck to all of them. Of course I say good luck to the people working in Boeing too, but in their case I suspect they’re going to need it.
I think BBD would have always struggles trying to beat the Giants.
Now they don’t and with the tie up its going to be a huge success.
The C500 is now possible.
Boeing people need all the good wishes we can give them, they live under the Mountain of Doom. Tough spot, people who want to make good aircraft under management that wants to quashed them so they can take all the money for themselves.
I always marled, if I had 1 million bucks there would not no happier person on the planet.
I guess I just don’t have enough greed in my soul.
At what point do you have more than you can ever use. 5-10, 100 million? Maybe I am just not into gold toilets.
Nothing wrong with solid gold toilets. They’re solid, functional, and you’ve got a hell of a residual value when they’re outmoded!
Before our friend of Aero Quebec inflicts his recurrent rethoric about “deep pockets governments” upon us, let’s take a look at how much Boeing is charging the US state just for changing two refrigerators on Air Force One : $24 M (you read well : twenty four millions !).
Pretty pathetic is it not.
Once a rich guy always a rich guy.
And who decided that they had to have that?
Our Stable Genius strikes again.
Ridiculous. This would soley between the USAF and Boeing.
I don’t see a mere normal order stepping in.
Who is buttering up who? 24 million so you con’t have to restock the fridge?
Wrong again! Flabby USAF contracting, since even before the disgusting O-man days!
Scott – are you now mulling further the idea you reported previously re Bombardier as a stalking horse for future Boeing claims against Airbus (May 17, 2017: “If Boeing prevails with the US and ITC, then a complaint may follow against Airbus, it’s suggested. It’s an interesting theory. And one worth watching.”)?
I think this is great opportuniyy for the U.S. Commerce Department to review it’s role in this process.
Maybe reconsider it’s policy in the light of short term political opportunism beating solid research and objective rulemaking.
They got themselves a credibility melt down here. Better look in the mirror for a minute.
Well, from a purely personal perspective, I now can look forward to being able to to choose a carrier/flight so I get to fly on the C-series.
Just dreaming, but maybe SWA could replace it’s 700s (the ones not being upsized to max-8) with CS-300.
Lastly, I can share this great news with my Canadian cousins who are mostly oblivious to such matters and amused by my interest in their countries aircraft.
Any US government change currently is going to be for the worse.
Be grateful that they realized that interference was alwyas possible and the ITC not only had the last say but is setup to be pretty independent.
Very much structured like the GAO.
Do not forget how much wider the seats in the CS are compared to AB and another step BO – the difference is HUGE !
Plain girl,no ones really interested.Everyone gets drunk,shes the only girl in the bar and suddenly everyone is fighting over her.Boeing makes it clear through their paid mouthpiece Lexington that they think AB has been suckered into a dreadful mistake.Much forked tongue speaking all round.
Grubbie: With all due respect I think that comment core is a comparison that should be left far in the past.
Ok,would plain boy and a pub full of drunken girls be alright?
I will not understand why Boeing did go after this at all.
The C series would have spent a lifetime as a niche plane, without a any perspective due to having a lot of trouble:
a) Bombadier in a finacial difficult position
b) lack of worldwide service, marketing, distribution and lack of financial capapilities to built it
c) insecurity for any buyer
d) no finacials to develop the programm further
e) unclear market segment
Now, they forced it into the hands of Airbus, and a – d is solved.
Boeing now has to buy Embraer for about 4bn. if they can, just to have something to compete with in the market <150pax.
What should have made the single aisle business easier for Boeing seems to have end in a disaster. Boeing is not only loosing now at the top end against A321neo but on bottom too.
What did they gain? The burned Delta as a customer, ruined their reputation, everybody did see Boeing hat nothing to compete…
So why did boeing go for this?
I cant see any gain in this.
4bn for Embraer,this might well be less than Airbus pays in fines for bribery. If AB is going to make a go of the C series,they are going to have to spend a lot more on product development,industrialisation and support.
All Boeing seems to have achieved is sowing confusion and chaos .
I don’t think that the C series is going to be a picnic for AB ,although it seems to be a nice strategic fit.
Airbus wont do anything, just milk the cow.
Sell Cs 100 and 300, that’s it. Both are developed, nothing to spend on.
They will do the same as they are doing with ATR.
Help with production, support, especially the worldwide availability and delivery of parts is an issue for Bomba, but Airbus has the network.
I do see some cost especially marketing and production, but that seems to be minor compared to the gain – the most modern single aisle airplane programm for basically nothing, already developed and with a few customers.
A ‘few customers’ ? 16 customers and 370 odd orders. (plus another 140 commitments of various types)
A good start for a business who didnt have a track record for this size and complexity of airliner.