National Post (National Edition)
Business jet rebound may prove cushion, analyst says
The preliminary antidumping decision, scheduled to be released Thursday, comes a week after the U.S. government hit Bombardier with a massive 220-per-cent countervailing duty that has effectively shut the company out of the U.S. market when it comes to the CSeries.
“It’s almost written in stone that they are going to face another massive margin, given what the Commerce Department found with the countervailing duty,” said Gary Hufbauer, a senior fellow at the U.S.based Peterson Institute for International Economics.
Boeing first filed a petition with the U.S. Department of Commerce in April asking it to investigate Bombardier, which it says embarked on “an aggressive campaign to dump its CSeries aircraft in the United States” and offered the new aircraft to Delta Air Lines Inc. at an “absurdly low” price.
Hufbauer said while Bombardier will almost certainly be hit with more hefty duties on Thursday, Boeing has to prove to the Washingtonbased International Trade Commission that it has been materially injured or threatened by injury as a result of the CSeries sale, something that could prove to be difficult for the Chicago-based company.
“At this point, I think the only hope for Bombardier in this legal battle that they’re in is at the ITC, when they issue their final determination on injury next year,” Hufbauer said. “I think it would be remarkable if the ITC found injury in the final determination.”
While Bombardier waits for the final verdict, Desjardins Capital Markets analyst Benoit Poirier said in a note to clients on Wednesday that improvements in the business jet market could be a key driver of the company’s profitability, something that could “have the potential to offset the overhang from Boeing’s petition.”
According to FlightGlobal, an industry publication, there have been signs of improvement in the business jet market this year, including a 20-per-cent decline in the number of business jets available for sale.
“This is a positive for Bombardier as lower inventories will likely stimulate demand for new aircraft,” Poirier wrote. “Overall, we are pleased with the encouraging signs seen so far, as (business jets) represent a key driver of Bombardier’s profitability.”
Bombardier has repeatedly rejected Boeing’s allegations, calling its petition “an unfounded assault on airlines, the travelling public and further innovation on aerospace.” In documents filed with the Commerce Department, Bombardier urged the government to either terminate the anti-dumping investigation or issue a negative determination, as it “had no sales of subject merchandise during the period of investigation.”
Delta also filed documents with Commerce, reiterating that Boeing never competed for the order that eventually went to Bombardier. The airline also argued that Boeing did not lose a sale because there, in fact, was no sale during the period of investigation outlined in the complaint.