Bombardier hit hard in Boeing dispute

Bombardier’s hopes for breaking into the U.S. commercial aviation market took a massive blow on Tuesday, as the U.S. Department of Commerce proposed a hefty 219 per cent duty on its CSeries jets.

The department ruled in a preliminary decision that Bombardier benefited from improper government subsidies, which gave the Montrealbased company an unfair advantage when selling south of the border.

The investigation was sparked by a complaint from U.S. aerospace giant Boeing, after Bombardier secured a deal for up to 125 of its CS100s with Delta Air Lines in April 2016.

The list price for the planes is around $6 billion, but the actual amount of money involved in the deal has not been made public and Boeing alleges Bombardier offered them for much less.

The financial penalties aren’t officially due until Bombardier delivers the first CS100 to Delta, which is expected in the spring. They could also still be dropped or refunded.

The key will be whether the U.S. International Trade Commissions finds that Bombardier-Delta deal actually hurt Boeing’s business, a decision that’s not expected until the spring.

But the ruling gives Boeing momentum as the dispute drags on, and more leverage in any future talks between the Trudeau government and the Chicago-based company to reach a negotiated settlement.

Boeing wasted no time in declaring victory on Tuesday.

“Subsidies enabled Bombardier to dump its product into the U.S. market, harming aerospace workers in the United States and throughout Boeing’s global supply chain,” the company said in a statement.

The dispute is not about limiting innovation or competition, it continued. “Rather, it has everything to do with maintaining a level playing field and ensuring that aerospace companies abide by trade agreements.”