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
Bjorn’s Corner: Keeping airliners operational. Part 2
By Bjorn Fehrm
April 20, 2017, ©. Leeham Co: We will start the second article in series on keeping airliners operational by discussing how the structure is kept fit.
There are three areas that are more key to flight safety of an airliner than others. The aircraft’s structure, the engines (already discussed) and the flight control system. We will start with the structure.
Figure 1. The first modern maintenance program was formed around the Boeing 747. Source: Wikipedia.
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8 Comments
Posted on April 28, 2017 by Bjorn Fehrm
Airbus, Airlines, Bjorn's Corner, Boeing
737, 737NG, A320, Airbus, Boeing, Southwest Airlines
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
Airbus group 1Q 2017 results: no surprises.
By Bjorn Fehrm
There was no news on the problematic A400M. Negotiations with the customers have just begun, any results will take time to materialize.
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31 Comments
Posted on April 27, 2017 by Bjorn Fehrm
Airbus
A320NEO, A330neo, A350, A350-1000, A380, A440M, Airbus
Could an NMA be made good enough? Part 6
By Bjorn Fehrm
Subscription Required
Introduction
April 27, 2017, © Leeham Co.: We have in several articles gone through the sizing of an NMA (New Midrange Aircraft). We looked at the fuselage, cabin, wings and engines. Now we will sum the exercises and look at the performance of the resulting aircraft.
Boeing is seriously considering launching an NMA. The key to the launch decision will be the airplane’s economics: for development and production as well as operation.
The idea is the NMA shall have “twin aisle comfort with single aisle economics.” We will now use or performance model to analyze if the final aircraft has these characteristics.
Summary:
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Leave a Comment
Posted on April 27, 2017 by Bjorn Fehrm
Airbus, Boeing, CFM, Future aircraft, MOM, Pratt & Whitney, Premium, Rolls-Royce
7M7, A321LR, Airbus, Boeing, CFM, MOM, NMA, Pratt & Whitney, Rolls-Royce
Boeing 1Q earnings: revenues down, profits up
There were fewer 737 deliveries as Boeing transitions from the 737NG to the 737 MAX. First deliveries of the MAX are due this quarter.
Likewise, Boeing is beginning a transition to a third family member of the 787. The first 787-10 rolled off the production line this month, beginning flight testing. The first delivery is scheduled for next year.
Revenue was down 7% YOY, to $21bn. Operating margin was up 1.7 points to 9.6%.
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9 Comments
Posted on April 26, 2017 by Scott Hamilton
Boeing
Boeing, Boeing 1Q2017 earnings, Boeing Commercial Airplanes, Boeing Global Services
Aeroflot, the route to a modern airline. Part 3
By Bjorn Fehrm
April 26, 2017, ©. Leeham Co: In our third article about Aeroflot, we cover the period from 2010 to today. During this period, Aeroflot started a strategic change. The airline decided to grow to a global world leader.
To get there, the group needed a multi-brand strategy. The top brand, Aeroflot, should develop into a top tier premium airline. To understand the considerable changes Aeroflot needed to go trough for this strategy, we talked to Aeroflot’s Deputy CEO Strategy and Alliances, Giorgio Callegari, about the transformation.
Callegari took us through the journey to a Four-star airline and the ranking of Aeroflot as the world strongest airline brand in its area of operation. To validate the improved ratings, we contacted Skytrax and Brand Finance, the issuers of the ratings. Read more
1 Comment
Posted on April 26, 2017 by Bjorn Fehrm
Airlines, Boeing, Sukhoi, United Aircraft
737, 777-300ER, A320, A330, Aeroflot, Airbus, Boeing, Giorgio Callegari, Skytrax
Airbus earnings preview: supplier issues depress deliveries
Problems with the Pratt & Whitney GTF and slower-than-expected ramp-up of the CFM LEAP affected A320neo deliveries in the quarter. Continuing problems with interiors supply depressed A350 deliveries.
We have earnings previews from two investment banks that cover Airbus.
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5 Comments
Posted on April 26, 2017 by Scott Hamilton
Uncategorized
A320NEO, A350, Airbus, Bernstein Research, Raymond James
Boeing earnings preview: doubts about Global Services target
Earlier today, LNC posted a Special Report from Kevin Michaels in which he believes it will be challenging for Boeing to meet its target of $50bn in revenues.
Separately, the aerospace analyst for Wells Fargo reached the same conclusion. His report is below, followed by other analyst previews of the earnings call.
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5 Comments
Posted on April 25, 2017 by Scott Hamilton
Boeing
1Q2017 Earnings Calls, Bernstein Research, Boeing, Buckingham Research Group, Canaccord Genuity, JP Morgan, Kevin Michaels, R. W. Baird, Wells Fargo
Boeing’s BHAG: Is $50bn Service Revenue Goal Achievable?
Special to Leeham News and Comment
By Kevin Michaels, Managing Director, AeroDynamic Advisory
Business gurus Jim Collins and Jerry Porras coined the phrase “Big Hairy Audacious Goal” (BHAG) to describe a business objective which is highly ambitious,
Kevin Michaels
galvanizes the organization, and is often met with skepticism from outside observers. Boeing recently created a BHAG that could transform aerospace MRO. Its goal is to triple its service revenue to $50bn within the next decade, and it is taking decisive action achieve its vision.
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5 Comments
Posted on April 25, 2017 by Scott Hamilton
Airlines, Boeing, GE Aviation
AeroDynamic Advisory, Aviall, Big Hairy Audacious Goal, Boeing, Boeing Commercial Airplanes, Boeing Global Services, GE Aviation, GoldCare, Jeppesen, Kevin McAllister, Kevin Michaels
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