Delta could snub Boeing, as well

TORONTO • One day after the Canadian government cancelled a deal to purchase fighter jets from the Boeing

Co. over its ongoing trade dispute with Bombardier

Inc., the U.S. aerospace giant was reportedly close to missing out on another multi-billion-dollar order.

According to a CNN report citing two people familiar with the deal, Delta

Air Lines is close to approving a major order from Boeing’s main rival.

The sources told CNN that the Atlanta-based airline’s board of directors was set to vote Wednesday on whether to place an order for 100 A321neo jets from aerospace giant Airbus SE. Based on list prices, the order could be worth US$12.7 billion.

A separate Delta order for 75 Bombardier CSeries jets is at the centre of the ongoing trade dispute that has pitted Boeing against Bombardier and Delta, as well as the Canadian, Quebec and U.K. governments.

Delta spokesperson Morgan Durrant declined to comment about the potential deal. When asked about how the ongoing trade dispute has affected Delta’s relationship with Boeing, Durrant pointed to previous comments made by Delta’s chief executive Ed Bastian.

“The CSeries debate or the decision from Commerce is not just disappointing, it doesn’t make a whole lot of sense,” Bastian said during a quarterly results conference call in October.

“We think it’s early in the discussion and we also know that it’s triggering a lot of discussions at political levels, not just within the aerospace field.”

According to previous reports, Delta had been looking to purchase about 100 single-aisle jets and was debating between Boeing’s 737 Max 10 and Airbus’ A321neo. Delta is hosting an investor day in Atlanta on Thursday.

Richard Aboulafia, an aviation analyst and vicepresident of Teal Group, said Boeing faced major political headwinds when it came to the Delta order because of its ongoing trade dispute with Bombardier.

“The reality is those political headwinds are a serious disadvantage in this competition,” he said. “There were so many second and third order effects of this ill-advised trade complaint, but this is certainly potentially one of the biggest.”

The potential order comes a day after the Canadian government confirmed it ditched its plans to buy 18 Super Hornets from Boeing and will instead purchase 18 second-hand F-18s from Australia.

The government also launched its program to buy up to $19-billion worth of new fighter jets, which includes a provision that appears to be a warning to Boeing in that “any bidder that is responsible for harm to Canada’s economic interests will be at a distinct disadvantage.”

The U.K. government has also previously warned that Boeing could lose out on British contracts in the future as a result of the trade spat.

Boeing has alleged that massive government subsidies have allowed Bombardier to dump the aircraft into the U.S. market at an “absurdly low” cost. The U.S. Department of Commerce agreed and hit Bombardier with a 300 per cent preliminary duty on all U.S.-bound CSeries jets, effectively preventing Delta from adding the CSeries to its fleet.

Helane Becker, an analyst with Cowen, said in a note to clients earlier this week that Airbus was the most likely contender for a new narrowbody order.

“Delta has essentially said ‘no hard feelings’ to Boeing after Boeing’s ongoing spout with Bombardier around the CSeries. Despite the public statement, we believe it is unlikely that Delta places an order with Boeing,” Becker wrote.