There were 361 orders and commitments announced, blowing through Boeing’s own forecast Monday of 240 orders. Never mind that 214 are conversions from other MAX orders, a fact Airbus COO Customers John Leahy used to downplay the program launch: the performance is a dramatic contrast to the poor reception Boeing received only three months earlier, at the ISTAT conference in San Diego, when a soft launch was rolled out by Boeing.
June 12, 2017, (c) Leeham Co.: Boeing won round one Friday in its price-dumping complaint against Bombardier over its sale of the CSeries to Delta Air Lines.
The US International Trade Commission (ITC) voted 5-0 to continue the investigation. It now goes to the US Department of Commerce to determine whether tariffs should be imposed on the deal, and how much. Delta Air Lines would have to pay the tariffs.
Boeing won this round but the big winner is likely to be Airbus.
May 30, 2017, © Leeham Co.: “Boeing’s petition…is unprecedented in its overreach. There have been no…imports and no domestic shipments during the period of investigation. There are no lost sales or revenues. Boeing does not even make a product that competes with the aircraft Bombardier offered in the United and Delta competitions….”
So begins Bombardier’s closing brief in the Boeing complaint before the US International Trade Commission (ITC).
May 29, 2017, © Leeham Co.: Boeing minced no words in its closing brief to the US International Trade Commission in its price dumping complaint against Bombardier.
“Bombardier’s intentional obfuscation simply proves that Bombardier has no credible answer to [the] allegations,” Boeing’s lawyers wrote in the second sentence.
May 25, 2017, © Leeham Co.: Boeing says its very future, and that of US aerospace industry, is at risk if Bombardier’s deal with Delta Air Lines for 75 CS100s and 50 options is not fined for price dumping.
That’s the claim company officials made in testimony before the US International Trade Commission May 18.
Boeing filed a complaint with the ITC and the US Department of Commerce April 27, charging that Bombardier sold the CSeries to Delta for $19.6m, a price so far below production costs that it constitutes “dumping” under legal definitions.
Bombardier and Delta deny the price and Bombardier denies the over-arching dumping claims.
LNC reviewed the 290-page transcript of the May 18 hearing.
May 8, 2017, © Leeham Co.: WestJet, Canada’s #2 airline behind Air Canada, is making dramatic departures from its low-cost, low-fare strategy since the company began operations in February 1996.
The company earlier announced it will form an Ultra Low-Cost Carrier (ULCC). Last week came an order for 10 Boeing 787-9s and options for 10 more. Deliveries begin in 2019.
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.
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.
Boeing’s press statement is below the jump.
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.
April 11, 2017: United Airlines is in the midst of a public relations nightmare following Sunday night’s incident in which a passenger was dragged off a flight at Chicago O’Hare International Airport.
A new commercial was immediately launched, debuting on the Jimmy Kimmel show. Kimmel had his own caustic remarks.
United also recognized that it needed a new training procedure following the incident. The following is a video for its customer service training.
April 3, 2017, © Leeham Co.: Sir Richard Branson came to Seattle last week to promote the new service by Virgin Atlantic Airlines to London. In a hissy-fit, he promptly pissed on Alaska Airlines for the business decision to drop the Virgin America brand in 2019.
Alaska, of course, acquired Virgin America last year. The acquisition didn’t sit well with Branson, who nevertheless made out well in the deal.
Although Alaska officials said they would decide later whether to retain the Virgin brand, only those with wishful thinking gave any chance of this happening.
Branson certainly knows this. In 1997, Virgin Group acquired the low fare carrier Euro Belgium Airlines for $60m and promptly dropped the name in favor of Virgin Express.
VE lasted only nine years; it ceased operations in 2006 when it was sold and merged into the new Brussels Airlines.
Branson’s whining over Alaska’s decision to operate the merged operations into the Eskimo’s image smacks of hypocrisy.
Let’s also remember that his Virgin Atlantic is 49% owned by Delta Air Lines, which is building a hub in Seattle in competition with Alaska. The fight between Alaska and Delta is sometimes bitter.
Branson’s criticism of Alaska might have as much to do with Virgin Atlantic’s partnership with Delta as it does his own bruised ego.
Pontifications is off this week.
March 20, 2017, © Leeham Co.: There are some major fleet decisions that will probably come down the pike this year at American, Delta and United airlines. Not all of them are going to be viewed positively by Airbus and Boeing.