April 27, 2017, © Leeham Co.: The Boeing Co. late today filed a petition with the US government, charging Bombardier with “dumping” the CSeries in its deal last year with Delta Air Lines for 75+50 CS100s. Delta can convert the order to the larger CS300, which competes with Boeing’s 737-700/7 MAX.
Boeing claims Bombardier sold the airplanes for about $20m, against a cost to build the airplanes of about $33m.
Delta Air Lines ordered the Bombardier CS100. Boeing claims the low price constitutes “dumping,” as defined in regulations.
The 1,039 page complaint cites as one of its references Leeham News and Comment. A redacted, 147 page version may be downloaded here: BBD Complaint 042717.
A Wall Street Journal article and Financial Times article summarize the complaint.
Boeing’s press statement is below the jump.
Delta Air Lines competition
Boeing competed in the Delta competition, offering a combination of used Boeing 717s and, LNC believes, new 737-700s. The fully amortized -700s can be offered at a very low price, compared with the new 737-7 MAX (which at that time was the 125-seat, two-class version, not the 149-seat configuration it has since become). Boeing beat Bombardier in a hot contest at United Airlines, predating the Delta deal, by offering the -700 at a rock-bottom price believed to be in the $24m range, a price Bombardier could not then match. (A United official denied the $24m price to LNC, but others cited this number.)
Since the United deal, Bombardier received investments from the Quebec provincial and federal governments specifically tied to the CSeries, and more than US$1bn from a quasi-government pension fund for a stake in Bombardier’s rail unit. The investments are widely considered to be bailouts that prevented Bombardier from declaring bankruptcy due to cost overruns and delays from the CSeries and Global corporate jet development programs.
Bombardier took a US$500m “onerous contract charge” in connection with the Delta order and one from Air Canada.
Rival Embraer immediately cried foul and alleged the government monies violate World Trade Organization rules. Bombardier says the financial structures comply with WTO rules. Brazil, at the behest of Embraer, filed a formal complaint with the WTO. Boeing, while not filing its own WTO complaint, joined in the action, according to press reports at the time.
Boeing’s action today so far is limited with the US government.
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Boeing-Bombardier complaint could affect competition in coming Delta neo-MAX RFP
Commentary
May 1, 2017, © Leeham Co.: Boeing’s complaint against Bombardier’s CSeries transaction with Delta Air Lines, and a request for millions of dollars in antidumping and penalties might be coming at a bad time.
Was the Boeing 787 program marked by “launch customer pricing” or “dumping”? This may depend on program or unit accounting. Boeing photo.
“Boeing requests that the Department initiate an antidumping investigation and impose antidumping duties on Aircraft from Canada in an amount sufficient to offset unfair pricing above.”
If Boeing is successful in its request of the US government and International Trade Commission to impose duties before the first CS100 is delivered to Delta next year, the cost of the airplane will balloon from the $19.6m Boeing calculates (and which BBD denies) to at least $33m.
It’s unclear from the complaint who would pay this penalty—Bombardier, maintaining the price to Delta, or would Delta have to pay the reset price?
Regardless, this kerfuffle can’t be welcome news to Delta, which already has a ruffled relationship with Boeing due to its opposition to the ExIm Bank and orders for Airbus aircraft.
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24 Comments
Posted on May 1, 2017 by Scott Hamilton
Airbus, Boeing, Bombardier, CFM, CSeries, Delta Air Lines, Embraer, Leeham News and Comment, Pratt & Whitney
737 MAX, 737-10, 737-900ER, 787, 7M7, A320ceo, A320NEO, A321ceo, Airbus, Boeing, Bombardier, CFM, CS100, CSeries, Embraer, LEAP, Pratt & Whitney
Boeing targets Bombardier for “dumping” CSeries in US
April 27, 2017, © Leeham Co.: The Boeing Co. late today filed a petition with the US government, charging Bombardier with “dumping” the CSeries in its deal last year with Delta Air Lines for 75+50 CS100s. Delta can convert the order to the larger CS300, which competes with Boeing’s 737-700/7 MAX.
Boeing claims Bombardier sold the airplanes for about $20m, against a cost to build the airplanes of about $33m.
Delta Air Lines ordered the Bombardier CS100. Boeing claims the low price constitutes “dumping,” as defined in regulations.
The 1,039 page complaint cites as one of its references Leeham News and Comment. A redacted, 147 page version may be downloaded here: BBD Complaint 042717.
A Wall Street Journal article and Financial Times article summarize the complaint.
Boeing’s press statement is below the jump.
Delta Air Lines competition
Boeing competed in the Delta competition, offering a combination of used Boeing 717s and, LNC believes, new 737-700s. The fully amortized -700s can be offered at a very low price, compared with the new 737-7 MAX (which at that time was the 125-seat, two-class version, not the 149-seat configuration it has since become). Boeing beat Bombardier in a hot contest at United Airlines, predating the Delta deal, by offering the -700 at a rock-bottom price believed to be in the $24m range, a price Bombardier could not then match. (A United official denied the $24m price to LNC, but others cited this number.)
Since the United deal, Bombardier received investments from the Quebec provincial and federal governments specifically tied to the CSeries, and more than US$1bn from a quasi-government pension fund for a stake in Bombardier’s rail unit. The investments are widely considered to be bailouts that prevented Bombardier from declaring bankruptcy due to cost overruns and delays from the CSeries and Global corporate jet development programs.
Bombardier took a US$500m “onerous contract charge” in connection with the Delta order and one from Air Canada.
Rival Embraer immediately cried foul and alleged the government monies violate World Trade Organization rules. Bombardier says the financial structures comply with WTO rules. Brazil, at the behest of Embraer, filed a formal complaint with the WTO. Boeing, while not filing its own WTO complaint, joined in the action, according to press reports at the time.
Boeing’s action today so far is limited with the US government.
Read more
76 Comments
Posted on April 27, 2017 by Scott Hamilton
Boeing, Bombardier, CSeries, Delta Air Lines, United Airlines
717, 737-7, 737-700, Air Canada, Boeing, Bombardier, CS100, CS300, Delta Air Lines, Embraer, United Airlines, World Trade Organization, WTO
No new design needed for turboprops, says Bombardier
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Introduction
April 4, 2017, © Leeham Co.: Bombardier doesn’t think a new, clean-sheet turboprop aircraft is needed any time soon, a position that stands in contrast with rival ATR.
Bombardier Q400.
Ross Mitchell, VP Commercial for BBD, believes the Q400 covers the turboprop segment from 70 to 90 seats and its operational flexibility covers everything airlines need today.
However, ATR has 85% of the backlog with BBD capturing the other 15%.
Still, Mitchell gives a strong defense of the Q400.
Summary:
Don’t believe everything ATR claims about operating cost advantages, BBD says.
BBD can move cockpit and wing production from Canada to lower costs—but where is the question.
Re-engining the Q400 isn’t in the cards, at least any time soon.
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Posted on April 4, 2017 by Scott Hamilton
Airlines, ATR, Bombardier, GE Aviation, Pratt & Whitney, Premium
ATR, ATR-72-600, Bombardier, China, Q400, Ross Mitchell
New ATR CEO favors clean-sheet design turboprop
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Introduction
March 30, 2017, © Leeham Co.: Economics simply don’t support development of a new turboprop any time soon, an analysis shows.
Low utilization by turboprop operators, the cost of development and the price to customers drive decision-making more than fuel prices.
LNC interviewed ATR and Bombardier officials for their views on development of a new turboprop. We also interviewed a key executive who knows the sector intimately. Their views diverge.
Summary
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1 Comment
Posted on March 30, 2017 by Scott Hamilton
Airbus, ATR, Bombardier, Premium
ATR, ATR-72, Bombardier, Christian Scherer, MA-60, MA-700, Q400, Ross Mitchhell
CSeries wrapping up London City certification
By Bjorn Fehrm
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Introduction
March 27, 2017, © Leeham Co.: Bombardier (BBD) CSeries did the last flights of a six-month London City Airport certification last week. The CS100, when certified for London City, will more than double the available payload/range out of the airport. In fact, it can reach New York direct with 40 business passengers on-board, something it demonstrated when it left the airport for JFK on the Saturday.
Figure 1. CS100 taking off for a validation flight at London City Airport. Source: Bombardier.
The aircraft was designed for this performance level from the outset. By designing the CSeries with engines and aerodynamics for the larger CS300, the smaller CS100 became a stellar take-off performer, providing short-field capabilities for London City and other urban airports.
Despite the design for London City, it took Bombardier six months to certify CS100 for the airport. We spoke to CSeries VP Rob Dewar about the challenges and the changes needed to the aircraft to meet the demands of London City.
Summary:
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3 Comments
Posted on March 27, 2017 by Bjorn Fehrm
Bombardier, CSeries, Pratt & Whitney, Premium
Bombardier, CS100, CS300, CSeries, London City Airport, Pratt & Whitney, Rob Dewar
CDB Leasing aims for 500-600 aircraft portfolio
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Introduction
March 16, 2017, © Leeham Co.: China’s evolving commercial aerospace and aviation industry has high-profile companies such as AVIC and COMAC, and its expanding supplier based, combined with joint ventures with Western companies is well known.
LNC spoke with the newly appointed CEO of CDB Leasing during the ISTAT conference last week in San Diego.
Peter Chang has been in the Western leasing business for decades, employed in key positions with Aviation Capital Group, ILFC and Aircastle—usually with responsibility for China.
He was named CEO of CDB in December, a move that was announced during the January Dublin conferences of Airlines Economics and Airfinance Journal. More key personnel announcements were made during ISTAT.
In an exclusive interview, LNC asked Chang about the origins of CDB, other Chinese lessors, the current policy of restricting flow of Chinese cash outside the country, the Boeing 737-10 and the Bombardier CSeries.
Here is this interview.
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Posted on March 16, 2017 by Scott Hamilton
Airbus, Airlines, Boeing, Bombardier, China, Comac, CSeries, ISTAT, Leasing, Lessors, Premium
737 MAX, 737-10, 737NG, A320ceo, A320NEO, Airbus, AirCastle, Aviation Capital Group, AVIC, Boeing, Bombardier, CDB Leasing, Comac, CSeries, ILFC, ISTAT, Peter Chang
Spirit AeroSystems, the world’s largest aerostructures company
A feature report.
By Bjorn Fehrm
March 15, 2017, ©. Leeham Co: Spirit AeroSystems is the world’s largest aerostructures supplier, with main facilities in Wichita (KS). I visited Wichita early March and was given a guided tour of the factories. It was a tour of contrasts.
In production hall two, the Boeing 737 fuselages are riveted together in much the same way as the Boeing B-29 Stratofortress was produced there during World War II. “Rosie the riveter” is replaced with a robot, but the hall still has a busy charm.
Figure 1. Hall two, the main 737 production area. Source: Spirit AeroSystems.
In another hall, the production is silent. The winding of the Boeing Dreamliner’s forward fuselage from rolls of tape is made with a swooshing sound. There are few people around; the machines rule. Everything is mega large; tape-layers, tools, autoclaves, the lot. Read more
34 Comments
Posted on March 15, 2017 by Bjorn Fehrm
Airbus, Boeing, Boeing KC-X tanker, Bombardier, CSeries, Mitsubishi, Spirit Aerosystems
737, 737 MAX, 747-8, 777-300ER, 777X, 787, A320NEO, A350, Airbus, Boeing, Bombardier, Mitsubishi
CRJ-200 an unexpected success in P2F market
March 8, 2017, © Leeham Co.: Bombardier CRJ-200s, rapidly being phased out of passenger service and consigned to the scrap yard, proved to be an unexpected success for freighter conversion company (Aeronautical Engineering Inc (AEI).
Converting the CRJ-200 from passenger to freighter as intended to be a bridge between the Boeing 737-400 and 737-800 P2F programs, Robert Convey, SVP Sales and Marketing, told LNC at the annual meeting of ISTAT in San Diego.
Rather than being a program for a handful of conversions, within three years, Convey landed 54 orders and counting.
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8 Comments
Posted on March 8, 2017 by Scott Hamilton
Boeing, Bombardier, ISTAT
737-800, 737-900, AEI, Aeronautical Engineering Inc., ATP, Boeing, Convair 580, CRJ-200, CRJ-200F, Douglas DC-6, ISTAT, MD-80, MD-80F, Robert Convey
Engine OEMs diverge on technology for next generation
March 7, 2017, © Leeham Co.: Representatives of the four major commercial engine
GE9X, the final engine in a decade-long engine renewal program for GE Aviation and CFM International
manufacturers have divergent views of the next round of engine development, either for the Middle of the Market/New Mid-range Airplane (NMA) or New Small Airplanes (NSA) coming in the next decade.
Officials of CFM, GE, Pratt & Whitney and Rolls-Royce appeared at the annual ISTAT conference in San Diego yesterday.
PW’s Rick Deurloo, SVP of Sales, Marketing Commercial Engines, had the added task of dealing with the highly-publicized teething issues surrounding its new Geared Turbo Fan engine on the Airbus A320neo.
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22 Comments
Posted on March 7, 2017 by Scott Hamilton
Airbus, Boeing, Bombardier, CFM, Comac, CSeries, GE Aviation, ISTAT, Middle of the Market, Pratt & Whitney, Rolls-Royce
737 MAX, A320NEO, Airbus, Boeing, Bombardier, CFM, CSeries, GE Aviation, ISTAT, Rolls-Royce
Boeing Services expansion wise, necessary move
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Introduction
March 6, 2017, © Leeham Co.: Boeing CEO Dennis Muilenburg wants the company to participate in the aftermarket aircraft services business and set a goal of $50bn in revenue in the coming years.
He looks at Boeing’s current business, the former Boeing Commercial Aviation Services (CAS), and sees a single-digit market share in a worldwide trillion-dollar market potential. Muilenburg understandably wants a greater share of this.
But LNC believes there is an additional driver: the intensely competitive commercial airliner business faces even greater competition in the coming years. Prices are under pressure today. China is developing its own aerospace industry, which will eat into sales by Boeing (and Airbus) in the home market. Russia has ambitions to renew its home-market airliner industry.
Boeing’s new Global Services unit is a hedge against the prospect of falling profits at Boeing Commercial Airplanes as these factors converge.
Summary
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Posted on March 6, 2017 by Scott Hamilton
Airbus, Boeing, Bombardier, China, Comac, Embraer, Irkut, Mitsubishi, Premium
737 MAX, 737-10, 737-7, A320NEO, AeroDynamic Advisory, Airbus, Boeing, Bombardier, CS300, Dennis Muilenburg, Embraer, Kevin Michaels, Mitsubishi
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