Delta CEO: We will not pay the 300% tariffs on new Bombardier CSeries jets

Bombardier CS100 DeltaBombardierA rendering of Delta’s incoming Bombardier CSeries jet.

Delta Air Lines will not pay the tariffs levied on its order of next-generation Bombardier CSeries airliners.

“We believe we will get the planes at our agreed contract price,” Delta CEO Ed Bastian told reporters and analysts during the airline’s earnings call on Wednesday.

Bastian added that his airline fully intends on taking delivery of the Canadian-built airliner, but will not pay a tariff.

The Delta CEO also said that he is prepared to delay the initial delivery of its first CS100 jet, set for early 2018, in order to sort out the deal.

On September 26, the US Department of Commerce’s International Trade Administration imposed a preliminary tariff of 219.63% on Bombardier’s C-Series jet. A week later, the ITA tacked on an additional 79.82% preliminary tariff.

As a result, Delta and Bombardier now face a 299.45% tariff on each of the 75 Bombardier CSeries aircraft Delta ordered back in 2016.

The Department of Commerce is expected to make a final decision on the matter in December of this year.

Earlier this year, Boeing filed a complaint with the US Government claiming that its business was harmed when Bombardier used Canadian Government subsidies to give Delta a price that was substantially below the cost it takes the build the planes.

Delta and Bombardier both refute these claims arguing that Bombardier’s planes do not compete with any Boeing products. Bastian has noted several times that Boeing stopped producing a 100 to 150-seat jet comparable to the CSeries more than a decade ago when it canceled the 717-200. Delta is currently the world’s largest operator of the 717.

Further, Delta also revealed that Boeing’s only proposed alternative to the CSeries was a batch of second-hand Brazilian Embraer E190 regional jets taken as a trade-in from Air Canada.

Get the latest Boeing stock price here.

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