Remember the 292% tariff ruling Boeing won against Bombardier and the CSeries? Turns out that was a short-lived victory. The US International Trade Commission ruled unanimously against Boeing today. The ruling – which can be appealed either within the US court system or to a NAFTA panel – kills the threat of penalties against Boeing’s smaller, Canadian rival.
Just a hunch here, but maybe the ITC ruled that Boeing wasn't harmed by the Bombardier jet since Boeing *doesn't actually compete with that jet*. (still surprising vote, tho)https://t.co/HWykbsWfPs
— Keith Johnson (@KFJ_FP) January 26, 2018
The ruling was handed down in a two minute long meeting of the 4-commissioner panel. Boeing needed only to secure two votes for a victory. It got none.
US ITC votes unanimously: No injury for Boeing! Bombardier wins! pic.twitter.com/c6HnfsnLSi
— Stephen Trimble (@FG_STrim) January 26, 2018
Bombardier issued a statement shortly after the ruling came down. It reads, in part:
Today’s decision is a victory for innovation, competition, and the rule of law. It is also a victory for U.S. airlines and the U.S. traveling public. The C Series is the most innovative and efficient new aircraft in a generation.…With this matter behind us, we are moving full speed ahead with finalizing our partnership with Airbus. Integration planning is going well and we look forward to delivering the C Series to the U.S. market so that U.S. airlines and the U.S. flying public can enjoy the many benefits of this remarkable aircraft.
For its part Delta Air Lines, representing the only US order for the type and the basis for the complaint, issued a statement that it is pleased by the ruling against “Boeing’s anticompetitive attempt to deny U.S. airlines and the U.S. traveling public access to the state-of-the-art 110-seat CS100 aircraft when Boeing offers no viable alternative.” It is unclear when the CS100 deliveries to Delta will begin. They were expected in early 2018 but Bombardier is slightly behind on production.
After the initial ruling in Boeing’s favor Airbus stepped in to support the CSeries program. It currently has a deal to take control of 50.01% of the CSeries from Bombardier and also to open a second final assembly line for the jets in Alabama. While that move was previously seen as an end-run on the potential tariffs the two companies appear keen to keep it in place. Airbus gains efficiency of scale at its Mobile plant and the geographic diversity offers some advantages for the CSeries delivery process as well.
Our partnership is fully on! We r building a FAL for the C Series in Mobile, Al, creating jobs!
— Rainer Ohler (@roblagnac) January 26, 2018
Indeed, the deal was moving forward earlier this afternoon, even in the face of a potential adverse ruling. Bombardier shared a photo of the teams working together in Montreal prior to the ITC announcement.
Full speed ahead on the C Series partnership! Senior Leaders from Airbus and Bombardier meeting in Montreal today to discuss integration planning. pic.twitter.com/bwrClKtpwa
— Bombardier Inc. (@Bombardier) January 26, 2018
Boeing can appeal but it is unclear the value of such a move. The manufacturer’s position already cost it a few potential deals, including significant ones on the military side of its operations. In one of those instances Canada scrapped a deal to buy Super Hornet fighters.
So where does this leave Boeing?
– Canada’s buying used F/A-18s from Australia
– Bombardier’s merging C Series with Airbus
– Delta's buying 100 A321neos
– Brazilian gov't won’t let Embraer merge with Boeing
– Boeing shares at $343, up 102% YoYhttps://t.co/3E6sGGtX3h
— Jon Ostrower (@jonostrower) January 26, 2018
And Boeing may want to save its cash and whatever corporate goodwill it still has to help further its efforts to align with Embraer – the on again, off again discussions about a merger or other joint venture flared up again just before the new year – to augment its offerings with a 100 seat model, something the 737 MAX 7 clearly never was meant to be.
Still, in its statement on the ruling Boeing maintains that it has suffered from “the billions of dollars in illegal government subsidies that the Department of Commerce found Bombardier received and used to dump aircraft in the U.S. small single-aisle airplane market.” Even with half the components of the CSeries made in the USA Boeing continues to maintain that the “violations have harmed the U.S. aerospace industry.”
One interesting take on the issue comes from Former ITC chairman Dan Pearson as quoted by Reuters:
Not a single commissioner was willing to buy Boeing’s arguments. I think ‘America First’ is a policy of the White House and the Commerce Department. But it’s not the policy of an independent agency (like the ITC).
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