- Boeing alleges Bombardier is dumping its planes on the US market at below-market prices.
- Bombardier’s 2016 sale of 75 C Series jets to Delta is at the heart of the matter.
- Bombardier calls Boeing’s allegations “pure hypocrisy.”
In April, Boeing filed a complaint that claimed Bombardier allegedly dumped its new C Series airline on the US market at illegally low prices.
On Monday, Bombardier hit back at Boeing’s claims calling it “pure hypocrisy.”
The heart of the matter lies with Delta Air Line’s landmark 2016 order for 75 new C Series airliners worth $US71 million each at list value.
However, Boeing alleges that Bombardier actually sold the planes for just $US19.6 million, far less than the $US33.2 million it cost the Canada firm to make the planes.
“Bombardier shares Boeing’s commitment to a level playing field, but in this case, they were not even on the field,” Bombardier said in a statement. “Delta ordered the C Series because Boeing stopped making an aircraft of the size Delta needed years ago.”
The Bombardier CS100 ordered by Delta is a 108-seat medium-range narrow airliner. It’s Boeing counterpart would the 737-600. However, it’s been half a decade since Boeing last included the 737-600 in its annual price list. Instead, the company has been marketing the larger, more expensive, and more profitable 737-700.
In addition, Bombardier characterised Boeing complaint as an attempt to “tilt the playing field in its favour and impose an indirect tax on the U.S. flying public through unjustified import tariffs.”
“Boeing welcomes competition and Bombardier can sell its aircraft anywhere in the world,” a company spokesman told Business Insider in an email. “But sales must be made according to globally-accepted trade rules.”
“Boeing had to take action as subsidized competition has hurt us now and will continue to hurt us for years to come, and we could not stand by given this clear case of illegal dumping,” the Boeing spokesman added.
Finally, Bombardier alleges that Boeing also engaged in heavy discounting of its revolutionary 787 Dreamliner, in some instances losing an average of $US25 million per plane for an entire quarter.
“It is pure hypocrisy for Boeing to say that the C Series launch pricing is a “violation of global trade law” when Boeing does the same for its new aircraft,” the Canadian aeroplane maker added.
However, Boeing claims that Dreamliner is now a profitable program with healthy market demand.
The Montreal-based company noted that Boeing’s legal action put thousands of jobs in the Canada, the US, and the UK in jeopardy.
In response, Boeing noted that it contributes $US3.3 billion annually to the Canadian economy and accounts for 14% of the economic impact Canada’s aerospace industry has in the country.
In 2016, Bombardier took a $US1 billion bailout from the Quebec government after delays and slow sales associated with the C Series program pushed the company onto shaky financial ground.
Here is Boeing’s entire statement to Business Insider:
“Boeing’s petition to the International Trade Commission seeks to restore a level playing field in the U.S. single-aisle aeroplane market. Boeing had to take action as subsidized competition has hurt us now and will continue to hurt us for years to come, and we could not stand by given this clear case of illegal dumping. Boeing is utilising longstanding, transparent legal procedures that have been law for decades. This is the normal course of action for addressing instances where a competitor is selling into the U.S. market below cost, and we will let the process play out. Boeing welcomes competition and Bombardier can sell its aircraft anywhere in the world. But sales must be made according to globally-accepted trade rules. Any claimed economic threat to Bombardier relating to our ITC case can be attributed to that company’s decision to flout U.S. trade rules. We believe that global trade only works if everyone abides by the same rules of the road, and that’s a principle that ultimately creates the greatest value for Canada, the United Kingdom, the United States, and our aerospace industry.”
Get the latest Boeing stock price here.
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