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Bombardier CSeries jets, Boeing complaints, and the Airbus takeover

robunos

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http://www.reuters.com/article/us-boeing-bombardier-analysis-idUSKBN18I23L

"Allegations that the Canadian firm dumped newly designed CSeries passenger jets in the United States at a steep loss have threatened a sale of F/A-18 warplanes to Ottawa, sending Boeing scrambling to save the deal."


cheers,
Robin.
 

Grey Havoc

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https://www.flightglobal.com/news/articles/canadian-defence-minister-cautions-boeing-after-cse-437768/

As already noted by others elsewhere in the forum, this could have dire consequences for the RCAF's Super Hornet order.
 

Machdiamond

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Why should Boeing care? The small Super Hornet order is peanuts compared to the threat that the upcoming 180 seat CS500 represents to them on the LCC market. Need to cut legs now before it's too late.
 

Grey Havoc

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https://www.flightglobal.com/news/articles/us-trade-commission-rules-against-bombardier-in-cser-438125/
 

Grey Havoc

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Triton said:
"Boeing seeks quick legal fix to stop Bombardier"
by Dominic Gates

Originally published September 21, 2017 at 8:37 pm Updated September 21, 2017 at 10:22 pm

Source:
http://www.seattletimes.com/business/boeing-aerospace/boeing-expects-a-quick-fix-on-dispute-with-bombardier/
 

DWG

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If Boeing wins and sees tariffs imposed, Bombardier is likely to turn to the Canadian government and ask for tariffs to be placed on Boeing sales to Canada, and to the WTO alleging illegal tariffs used to defend Boeing's dominant US market position. And the CS.100 having no Boeing competitor means they have a good chance of being taken seriously in WTO, and seeing punitive tariffs placed on Boeing. Boeing might still see that as worthwhile, but hardening a reputation as the neighbourhood bully where marketing is concerned isn't necessarily a sensible long term move, nor is pissing off the governments of two of your major markets.

And of course it lets Bombardier pitch the C Series as the aircraft that terrifies Boeing. And ultimately, the C Series order was so vital to get sales moving that Bombardier might still see it as worthwhile, even if it effectively loses the U.S. market as a result.

Seems to me that the risk to Boeing on this one is higher than the risk to Bombardier, and that they've been emboldened by having a Trump White House to theoretically back them. But that doesn't make the risks go away, it makes them bigger.
 

Triton

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"In Boeing victory, Commerce Dept. slaps massive tariff on rival small jets from Bombardier"
Originally published September 26, 2017 at 3:30 pm Updated September 26, 2017 at 6:49 pm

by Dominic Gates

Source:
http://www.seattletimes.com/business/boeing-aerospace/bombardier-boeing/

The U.S. Commerce Department sided with Boeing on Tuesday in the jetmaker’s tense trade dispute with Bombardier, imposing a massive tariff that would more than triple the price of Bombardier’s CSeries jets sold to American airlines and could further erode relations between the U.S. and Canada.

Commerce slapped a 219 percent tariff on the planes after concluding that Bombardier’s crucial CSeries sale to Delta Air Lines last year was supported by subsidies from the governments of Canada and the U.K....
 

Flyaway

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Time for the UK government to reconsider any defence dealings with Boeing I think.

UK government 'bitterly disappointed' by CSeries ruling

UK government representatives insist they will work to defend jobs in Bombardier's Northern Ireland facility following the adverse US ruling over the Canadian airframer's CSeries jet.
https://www.flightglobal.com/news/articles/uk-government-bitterly-disappointed-by-cseries-rul-441557/

Boeing UK contracts 'jeopardised' over Bombardier row

Boeing's trade dispute with Bombardier "could jeopardise" its defence contracts with the UK government, the UK's defence secretary has warned.
http://www.bbc.co.uk/news/uk-northern-ireland-41397181
 

starviking

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Flyaway said:
Boeing UK contracts 'jeopardised' over Bombardier row

Boeing's trade dispute with Bombardier "could jeopardise" its defence contracts with the UK government, the UK's defence secretary has warned.
http://www.bbc.co.uk/news/uk-northern-ireland-41397181
If the UK Govt. has to choose between massive redundancies in Northern Ireland or Boeing's contracts... Kawasaki may be getting a few P-8 related phone calls...
 

Flyaway

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starviking said:
Flyaway said:
Boeing UK contracts 'jeopardised' over Bombardier row

Boeing's trade dispute with Bombardier "could jeopardise" its defence contracts with the UK government, the UK's defence secretary has warned.
http://www.bbc.co.uk/news/uk-northern-ireland-41397181
If the UK Govt. has to choose between massive redundancies in Northern Ireland or Boeing's contracts... Kawasaki may be getting a few P-8 related phone calls...
Not to get too political especially when the government is relying on DUP votes to keep it afloat.
 

LowObservable

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Will Dassault, Eurofighter or Saab be the first to paint one of their airplanes white and call it the Arrow II?
 

sferrin

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LowObservable said:
Will Dassault, Eurofighter or Saab be the first to paint one of their airplanes white and call it the Arrow II?
A shame they never produced the Mirage 4000.
 

Avimimus

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LowObservable said:
Will Dassault, Eurofighter or Saab be the first to paint one of their airplanes white and call it the Arrow II?
If Saab really wants traction in the Canadian market they'd need to tender the twin-engined Gripen again.
 

tacitblue1973

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Not so shocking hypocrisy since all the major aerospace industry players have benefitted from subsidiaries or grants to either keep them in business or stop them from moving elsewhere. No airline buys planes at list price if they can help it. It's just business meets politics as its always been. Lots of precedent. The auto industry is the same.
 

FighterJock

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If I were Boeing I would be careful as to what I was saying about the Bombardier problem as the RAF could quickly cancel the P-8A order and go instead for the Bombardier MPA.
 

marauder2048

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FighterJock said:
If I were Boeing I would be careful as to what I was saying about the Bombardier problem as the RAF could quickly cancel the P-8A order and go instead for the Bombardier MPA.
Cancelling an FMS case of that size and at this stage for convenience ??!!

The UK might as well pay to take delivery of the first two P-8As they have on order and then blow them up.

It would have the same effect.
 

Foo Fighter

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I am sure that an alternative can be found.
 

mrmalaya

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I think the emphasise was on the effect it could have on future orders from the UK. After all, the Poseidon order is well advanced and unless Leonardo come up with a miracle, the Apaches will be replaced with Apaches.
 

sferrin

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"We need you guys to send those D-5s back. . ."
 

mrmalaya

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That could certainly be described as the "Nuclear option".

Anyway, perhaps it's time the UK issued a contract to a US supplier other than Boeing. A massive Chinook fleet, MPA and a straight buy of the new Apache to name but a few Boeing products propping up the UK armed forces.
 

sferrin

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mrmalaya said:
That could certainly be described as the "Nuclear option".

Anyway, perhaps it's time the UK issued a contract to a US supplier other than Boeing. A massive Chinook fleet, MPA and a straight buy of the new Apache to name but a few Boeing products propping up the UK armed forces.
Swap those Chinooks for new CH-53Ks. ;D
 

robunos

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sferrin said:
"We need you guys to send those D-5s back. . ."
While not going 'quite' that far, I was thinking along the same lines . . .UK MOD cancels the P-8 order, USGOV leans on LM to pull F-35 work from BAE Systems, BAE is also a big player in US defence now . . .
and, ironically, of course,in 1992 Bombardier took over DeHavilland Canada, which used to owned by . . . Boeing!
(wonder if that's got anything to do with this . . . ;) ::) )

also this, from Wiki . . .
"In May 2005, the CSeries development was evaluated at US$2.1 billion, shared with suppliers and partner governments for one-third each. The Government of Canada would invest US$262.5 million, the Government of Quebec US$87.5 million and the Government of the United Kingdom US$340 million (£180 million), repayable on a royalty basis per aircraft.[13] The UK Government contribution is part of an investment partnership for the location of the development of the wings, engine nacelles and composite empennage structures at the Belfast plant,[14] where Bombardier bought Short Brothers in 1989."

cheers,
Robin.
 

sferrin

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My comment was mostly tongue-in-cheek. The tit-for-tat could get out of control though. Next thing you know there's no F-35s for the UK's two carriers.
 

robunos

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sferrin said:
My comment was mostly tongue-in-cheek. The tit-for-tat could get out of control though. Next thing you know there's no F-35s for the UK's two carriers.
I understood that, but as you say, things can rapidly get out of control. Take this article . . .

http://www.msn.com/en-gb/money/news/theresa-may-threatens-us-with-trade-war-over-bombardier-row/ar-AAsydcy?li=AA54rU&ocid=mailsignout

"Theresa May has threatened a trade war with the US after it slapped punitive tariffs on British-built aircraft, casting doubt on a key plank of her Brexit strategy.

The US Department of Commerce decided Bombardier aircraft, built in Northern Ireland, should be subject to 219 per cent import duty after the American aviation giant Boeing complained that Bombardier had been given unfair state aid.

The Government responded by warning that Boeing’s behaviour “could jeopardise” future Ministry of Defence contracts for its aircraft such as Apache helicopters." (my bold)

cheers,
Robin.
 

Triton

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"Why the Delta CSeries order is worth all the trouble for Bombardier"
Sep 27, 2017 by Aaron Karp in AirKarp

Source:
http://atwonline.com/blog/why-delta-cseries-order-worth-all-trouble-bombardier

Delta Air Lines’ order for 75 firm CSeries aircraft placed in April 2016 was probably the most significant commercial aircraft order ever won by Montreal-based Bombardier. Both Boeing and Embraer took notice; the US and Brazilian aircraft manufacturers have made the Delta order the cause celebre in two brewing international trade disputes over alleged CSeries subsidies—one between the US and Canada and another between Brazil and Canada.

The US Commerce Department’s preliminary ruling announced Sept. 26, which sets the stage for a staggering 219.3% duty to be placed on each CSeries delivery to the US, certainly jeopardizes Bombardier’s ability to sell the CSeries to US carriers. The US market is viewed by Bombardier as ripe for the CSeries. The Canadian manufacturer, for example, has been eyeing American Airlines’ fleet of more than 120 Airbus A319s, for which it believes the CSeries would be an ideal replacement. But a nearly 220% duty would probably make future sales in the US market unviable.

And what about the Delta order? Technically, the US government would collect the stiff duty from Delta, but there is no doubt Bombardier would pick up the tab. So is it worth it?

In a word, yes. Bombardier believes Delta operating the CSeries will be the tipping point that puts the aircraft in high demand all over the world.

Bombardier won breakthrough orders for the CSeries from Delta and Air Canada (45 firm CS300s) last year, but has not announced any new orders since—despite CS100s and CS300s in service with Swiss International Air Lines (SWISS) and Latvia’s airBaltic performing quite well. Delta’s first CSeries delivery is scheduled for the spring of 2018.

“Once Delta and Air Canada start flying those birds in the US and Canada, [airlines will see] the CASM is phenomenal,” Bombardier VP-regional aircraft Kevin Smith told reporters this week at the Regional Airline Association convention in West Palm Beach, Florida. “When Delta starts operating the aircraft out of New York and Los Angeles and then Seattle, and Air Canada takes delivery in the spring of 2019, the aircraft will be ubiquitous. It will be everywhere.”

At that point, US passengers (and in turn the US consumer media) are sure to take notice of the aircraft’s comfort, Bombardier believes. The growing buzz about the aircraft’s comfort combined with its cost performance in service in both North America and Europe will convince airlines in the US and globally that it is a must-have. At least, that is the theory, which largely hinges on Delta operating the CS100 out of major US markets (with an assist from Air Canada, which is expected to operate CS300s from US cities to Canadian hubs to connect passengers to the airline’s Boeing 787 network).

Given this, Bombardier is sure to plow forward undaunted with CSeries deliveries to Delta.

As for the duty actually going into place? It remains to be seen how this will play out now that the Commerce Department has raised the specter of a 219.3% duty. The CSeries is a globally manufactured aircraft. Its geared turbofan (GTF) engine, one of the aircraft’s big calling cards in terms of fuel efficiency and low noise levels, is made in the US by Pratt & Whitney. Its wings are produced in Northern Ireland. So the duty won’t just be a penalty on Bombardier and Canada.

Pratt parent United Technologies Corp. (UTC), based in Connecticut, employs more than 200,000 people and generates more than $57 billion in annual revenue. A duty on the CSeries, particularly one that makes sales to US airlines less likely, inevitably will hurt UTC. Is the Trump administration prepared for collateral damage to US companies and workers? And UK Prime Minister Theresa May has already expressed her disappointment with the potential CSeries duty given its implications on wing production in Northern Ireland. Does the Trump administration want a trade tiff with the UK as it tries to negotiate a post-Brexit trade deal with the UK?

[NOTE (9/28): A reader correctly points out that Pratt's final assembly line for the PW1500G, the variant of the GTF powering the CSeries, is located in Mirabel, Quebec. But the GTF is undeniably a US product, as are about half of the components on the CSeries. And many of the PW1500G's parts are manufactured in the US before being shipped to Mirabel for final assembly. The larger point is that any measure that diminishes CSeries sales prospects will inevitably hurt Pratt and its parent UTC, a major US corporation, as well.]
 

Flyaway

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What’s up with Boeing these days, they seem to play hardball in all sectors be it unions or competitors.?
 

Foo Fighter

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robunos said:
sferrin said:
My comment was mostly tongue-in-cheek. The tit-for-tat could get out of control though. Next thing you know there's no F-35s for the UK's two carriers.
I understood that, but as you say, things can rapidly get out of control. Take this article . . .

http://www.msn.com/en-gb/money/news/theresa-may-threatens-us-with-trade-war-over-bombardier-row/ar-AAsydcy?li=AA54rU&ocid=mailsignout

"Theresa May has threatened a trade war with the US after it slapped punitive tariffs on British-built aircraft, casting doubt on a key plank of her Brexit strategy.

The US Department of Commerce decided Bombardier aircraft, built in Northern Ireland, should be subject to 219 per cent import duty after the American aviation giant Boeing complained that Bombardier had been given unfair state aid.

The Government responded by warning that Boeing’s behaviour “could jeopardise” future Ministry of Defence contracts for its aircraft such as Apache helicopters." (my bold)

cheers,
Robin.
I rather doubt TM has made any threats of any kind, let alone a trade war. People are over reacting as usual and the media are right at the front.
 

Moose

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Flyaway said:
What’s up with Boeing these days, they seem to play hardball in all sectors be it unions or competitors.?
Folks in charge there have mistaken bellicosity and tactlessness for leadership. It's a trend.
 

Triton

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"Bombardier got subsidies? Boeing received $64B from the U.S. government"
by Erica Alini National Online Journalist, Money/Consumer Global News

September 28, 2017

Source:
https://globalnews.ca/news/3773916/bombardier-boeing-subsidies/
 

FighterJock

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Triton said:
"Bombardier got subsidies? Boeing received $64B from the U.S. government"
by Erica Alini National Online Journalist, Money/Consumer Global News

September 28, 2017

Source:
https://globalnews.ca/news/3773916/bombardier-boeing-subsidies/
That is news to me Triton, Boeing receiving money from the US Government? If I were Bombardier I would let Boeing know how I felt about the $64 billion.
 

Grey Havoc

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http://www.telegraph.co.uk/travel/news/bombardier-c-series-aircraft-boeing-dispute/
 

DWG

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WRT .Boeing playing hardball, that's been the case for a long time. Their marketing has always had a heavy focus on attacking the opposition, rather than solely promoting their own aircraft, c.f. all the money they spent trying to convince people there was no market for the A380, which arguably worked. The irony is so much of recent Boeing management, Phil Condit and Alan Mulally, came out of 777, with its emphasis on 'working together'.

(Edited to change A340 to A380, which is what I meant).
 

Triton

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"CSeries prices threaten 737 Max 7 'viability': Boeing"
25 May, 2017 SOURCE: Flight Dashboard BY: Jon Hemmerdinger Boston

Source:
https://www.flightglobal.com/news/articles/cseries-prices-threaten-737-max-7-viability-boein-437624/

Bombardier's CSeries and its aggressive sales tactics threaten the very existence of Boeing's 737 Max 7 and the US aerospace industry, Boeing's vice-chairman Ray Conner told US trade officials last week.

"The 100-150 seat market matters greatly to Boeing, and Bombardier is very close to forcing us out of this altogether," Conner said during a hearing held by the United States International Trade Commission on 18 May.

"It will only take one or two lost sales involving US customers before commercial viability of the Max 7, and therefore the US industry's very future, becomes very doubtful," Conner added, according to a hearing transcript obtained by FlightGlobal.

Conner and other representatives of Boeing, Bombardier and Delta Air Lines spoke at the hearing into whether Bombardier violated trade rules.

The US government launched the examination after Boeing filed a petition on 27 April claiming financial harm from Bombardier's subsidies and low sales prices.

Boeing alleges that Delta, which purchased 75 CS100s in 2016, paid about $20 million each for aircraft that cost Bombardier $33.2 million each to produce.

Bombardier was able to make the deal because it received $2.5 billion in government equity infusions and billions more in other subsidies, Boeing alleges.

The Canadian airframer's tactics have depressed prices for competing small narrowbody aircraft like 737-700s and 737 Max 7s, Boeing says, adding that pressure from Bombardier forced Boeing to cut the price of 737-700s it sold to United Airlines.

"The way they're pricing it is dumped beyond any reasonable imagination," Robert Novick, an attorney for Boeing, told the Trade Commission. "If Boeing cannot secure additional orders for the 737 Max 7, or is forced to sell at depressed prices, the programme will not succeed and Boeing will be eliminated from the 100 to 150 seat market."

Parallel investigations by the Trade Commission and the US Department of Commerce are scheduled to wrap up by November and could result in import duties, the Department of Commerce has said.

Representatives from Bombardier and Delta dismissed Boeing's claims, insisting the CSeries does not compete with larger 737s.

Bombardier developed CSeries to fill a need that arose after Boeing abandoned the roughly 100-seat market when it stopped making 717s a decade ago, they said.

Boeing's 737-700 and 737 Max 7 carry roughly 126 to 138 seats, while CS100s carry about 108 seats.

"Boeing doesn't even make a product that competes with the aircraft Bombardier offered," said Peter Lichtenbaum, an attorney representing Bombardier. "Aircraft are not like shampoo, where getting 30% more for a comparable price is a bonus."

Indeed, Conner confirmed that due to Delta's price requirements Boeing initially had discussed selling Delta used 717s or traded-in Embraer 190s.

"Boeing could not offer us a new airplane in the 100- to 110-seat space that met our needs in the timeframe that we needed to execute," Delta senior vice-president of supply chain management and fleet Gregory May said at the hearing. "It would be wrong to suggest that Boeing lost sales to Delta because we purchased the CS100. Boeing simply was not in the mix."

May also addressed pricing, saying airlines commonly get discounts in exchange for risks associated with being an initial customer of a new aircraft.

"Everyone in the industry understands that the first marquee… customer is being rewarded for being the first for fully evaluating the aircraft," May said.

Though Bombardier did not disclose prices paid by Delta, the airframer's vice-president of commercial operations Ross Mitchell dismissed the $20 million figure.

"The price that has been quoted is way off, and we'll leave it at that," he said.

Much of the hearing focused on seat count, with Boeing insisting the CS100 competes in the 100 to 150 seat segment, and Bombardier and Delta saying CSeries actually occupies a smaller, unique niche.

"A 100-seat plane and 150-seat plane are not interchangeable for Delta's purpose," said Delta vice-president of network planning in the Americas Joe Esposito.

Still, Conner and other Boeing representatives painted Bombardier's price cuts as threatening the "commercial momentum" of the 737 Max 7.

"The Boeing 737 Max 7 appears to be perilously close to, or maybe even already… locked into such a negative commercial momentum cycle," said Jerry Nickelsburg, a University of California Los Angeles economist who spoke on behalf of Boeing.

"It is already a precarious situation," Conner said.

Boeing has received orders for just 63 737 Max 7s from five customers, and has not received a significant order since 2013, Conner said.

"Bombardier has said it wants 50% of this market, which it will probably win at the prices it is offering. If Bombardier does that, we're looking at losing $330 million dollars in revenue every year," Conner says.
 

Triton

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"In Bombardier fight, Boeing sees ghost of Airbus ascent"
Tim Hepher, Alwyn Scott

May 22, 2017

Source:
https://www.reuters.com/article/us-boeing-bombardier-analysis/in-bombardier-fight-boeing-sees-ghost-of-airbus-ascent-idUSKBN18I23L

PARIS/SEATTLE (Reuters) - Two words underpin Boeing’s (BA.N) decision to launch a U.S. trade complaint against Bombardier (BBDb.TO), which plunged it into a row with Canada last week: “Never again”.

Allegations that the Canadian firm dumped newly designed CSeries passenger jets in the United States at a steep loss have threatened a sale of F/A-18 warplanes to Ottawa, sending Boeing scrambling to save the deal.

Some analysts say Boeing carelessly put at risk billions of dollars of defense work or pandered to growing protectionism.

But decades after Boeing failed to prevent European upstart Airbus gaining momentum with early victories in the United States, people familiar with the company say the strategic importance of defending its core passenger jet business outweighs the diplomatic storm.

U.S. industry experts say Boeing and other jetmakers at the time did not take the European consortium seriously enough and allowed their future nemesis to poach U.S. airlines from 1978.

Again after the September 2001 attacks in the United States, when Boeing slashed production, Airbus (AIR.PA) filled the vacuum, building up market share and never looking back.

For years Boeing insiders have rued that decision, even while battling Airbus at the World Trade Organization (WTO) over mutual accusations of unfair subsidies.

While leading in widebody jets, it has seen the narrowbody market – where the industry makes most cash - slip away as Airbus grabbed some 60 percent of new-generation sales.

Such a significant imbalance in market share poses serious long-term risk to the loser in the Airbus-Boeing duopoly, because it creates a gap in costs that can’t easily be bridged.

Now, Boeing sees a second rival entering its domestic market with what it sees as low prices and is determined not to underestimate the threat again, people close to the company say.

“It’s a crucial entry market,” said a person familiar with Boeing’s strategy in taking on Bombardier. “This is the case Boeing might have brought against Airbus 40 years ago. Not taking action at the start led to consequences.”

On the surface, Boeing’s case is about the sale of jets to Delta Air Lines at what Boeing claims were unfairly low prices.

Bombardier denies Boeing’s estimates of both the price and the cost at which it is able to make its new jet, while critics say Boeing accounting rules allow it to disguise weak pricing.

While the high-profile deal ignited Boeing’s complaint, executives say Boeing’s stance reflects a longer-term concern.

Although Bombardier’s small narrowbody jet has so far barely scratched Boeing’s larger 737 and has suffered a spate of financial problems, the all-new design disturbs a landscape made up mainly by makeovers of existing Airbus and Boeing models.

With Airbus still well ahead on narrowbody orders even after a recent lull, Boeing can ill afford to be squeezed on two fronts. Even less so with new players like China arriving.

A Boeing spokesman declined to comment.
PRECISION TRADE WEAPON

Boeing’s response marries strategic worries about its narrowbody position with a legal tactic designed to exploit a vulnerability the CSeries has, but global rival Airbus did not.

The 110-130 seat CSeries relies mainly for now on the regional jet market, where North America is by far the largest single component and whose airlines therefore decide its future.
A logo of jet manufacturer Bombardier is pictured on their booth during the European Business Aviation Convention & Exhibition (EBACE) in Geneva, Switzerland, May 22, 2017. REUTERS/Denis Balibouse

That hands Boeing the opportunity to make use of a domestic lawsuit ill-suited to its global confrontation with Airbus, but which if successful could deliver a hammer blow to the CSeries.

Trade sources see a second tactical motive for spurning the WTO and filing the industry’s first such domestic U.S. case.

U.S. anti-dumping cases typically take a year - versus 13 years and counting in its trench warfare against Airbus.

That coincides with first delivery of a CSeries to Delta in April 2018. If Boeing succeeds, the jets could be hit from day one with extra duties, blunting Bombardier’s competitiveness more quickly and more directly than normal trade sanctions.

Still, Boeing faces a headache over what to do about lost fighter sales if Canada makes good on a threat to drop a deal for F/A-18 warplanes in retaliation for Boeing’s trade claim.

With Boeing’s future fighter production in jeopardy as sales run dry, Boeing is anxious to keep its presence in that business long enough to compete for tomorrow’s military programs.

But without stability in its narrowbody jetliner business, Boeing faces an even deeper concern, since this is the cash cow for many of the company’s other activities.

Sources says Boeing’s defense bosses signed off on bringing the trade case, highlighting the importance attached to the 737.

The broader stakes raised by Bombardier’s foray into the U.S. market were underscored when China was reported to revive on-off talks to invest in Bombardier. Airbus itself weighed buying the CSeries before talks collapsed in 2015.

Whoever wins the trade spat between Bombardier and Boeing, one thing is clear: the small jet from Montreal has made its mark on the strategic calculations of all industry rivals, and now faces a battle for new sales.
 

Triton

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"WTO to probe Bombardier, spurred by Brazil’s complaints about Canadian subsidies"
Originally published September 29, 2017 at 9:54 am Updated September 29, 2017 at 10:02 am

by Frederic Tomesco and Bryce Baschuk

Source:
https://www.seattletimes.com/business/wto-to-probe-bombardier-spurred-by-brazils-complaints-about-canadian-subsidies/

The World Trade Organization approved Brazil’s request to investigate Canada’s alleged use of more than $3 billion in government subsidies to produce Bombardier aircraft.

The South American nation began WTO consultations in February, saying Canada ran afoul of trade rules because its policies unfairly bolstered the domestic aerospace industry to the detriment of Brazilian planemaker Embraer. Canada offered billions of dollars in loans, equity infusions, grants and tax credits to Bombardier, Brazil said.

The probe by the Geneva-based trade body adds to pressure on Montreal-based Bombardier just days after the U.S. Commerce Department slapped import duties of about 220 percent on the company’s C Series jets. That followed an investigation that began after a complaint by Boeing.

“We are confident that the investments and contribution programs mentioned in Brazil’s petition are in full compliance with all WTO and international trade rules,” Bombardier spokesman Simon Letendre said by email.

Analysts pan Boeing strategy in pushing for tariffs on Canada’s smaller jet

A spokesman for the Canadian international trade ministry said the government will defend Bombardier and the Canadian aerospace industry. “All aircraft-producing countries provide some form of support to their aircraft industry,” the spokesman, Joseph Pickerill, said by email. “Canada will be examining closely Brazilian government support.”

At the WTO, Brazil said Canada’s various aircraft subsidies violate WTO rules because they are contingent on export performance and require the use of domestic over imported goods.

Subsidies have allowed Bombardier to sell its aircraft at “artificially low prices,” Embraer Chief Executive Officer Paulo Cesar Silva said in a statement. “In order to ensure that competition in the commercial aviation market continues to be between companies, and not governments, it is essential to restore a level playing field, respecting fair trade conditions.”

The WTO will now appoint three dispute-settlement panelists to determine whether Canada’s various financing programs for Bombardier violated international trade rules. Though such investigations typically take less than a year, a ruling in the case may be extended to 2019 because of delays and staffing shortages at the WTO.

“This is par for the course for the aerospace industry,” Cam Doerksen, an analyst at National Bank Financial in Montreal, said in an interview. “Canada and Brazil have had previous aircraft fights at the WTO. This dispute is not something that’s measured in months. It will take years.”
 

marauder2048

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US Secretary of Commerce Wilbur Ross said one reason for the tariff ruling was
Bombardier's failure to cooperate with the investigation.

"The evidence we have to rely on is evidence not coming from Bombardier but evidence being proposed by
Boeing and other outside parties," he said
Merits of the case aside:

Doing the above while deploying two heads of state in an end-run around
the investigation is a great way to endear yourself to just about any
compliance/enforcement agency.
 

Hood

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In the long run Boeing risks losing customers.
Back in September 2016 Boeing launched a legal challenge against Denmark's selection of the F-35 over the F/A-18 over alleged flawed evaluation. Then in April Boeing pulled out of the Belgian contest due to a perceived unequal playing field. By the Paris show last June Boeing was sulking that there was little point in trying to enter competitions which were 'pre-determined'.

It seems to be Boeing's lawyers who are getting rich even if the company isn't. I know its a sign of the litigious times we live in but eventually its going to cause blowback. And lets be honest plenty of public money has flowed into both Boeing and Embraer over the years.

On the other hand never discount the "Shorts Effect", its been a powerful force ever since the Northern Ireland factory was built and its distorted British defence and economic policy many a time ever since and its effect is no less today. As I said in another post today, its a funny thing how things sometimes go in circles in the aviation world.
 

FighterJock

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Hood said:
In the long run Boeing risks losing customers.
Back in September 2016 Boeing launched a legal challenge against Denmark's selection of the F-35 over the F/A-18 over alleged flawed evaluation. Then in April Boeing pulled out of the Belgian contest due to a perceived unequal playing field. By the Paris show last June Boeing was sulking that there was little point in trying to enter competitions which were 'pre-determined'.

It seems to be Boeing's lawyers who are getting rich even if the company isn't. I know its a sign of the litigious times we live in but eventually its going to cause blowback. And lets be honest plenty of public money has flowed into both Boeing and Embraer over the years.

On the other hand never discount the "Shorts Effect", its been a powerful force ever since the Northern Ireland factory was built and its distorted British defence and economic policy many a time ever since and its effect is no less today. As I said in another post today, its a funny thing how things sometimes go in circles in the aviation world.
Boeing have only themselves to blame if they start to loose customers. For example, look at what they tried to do when the B-21 program was won by Northrop.
 

DWG

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FlightGlobal has a poll on Boeing pushing this. Rank hypocrisy leads with 84% of the vote, and no case to answer has another 5%.
 
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