Delta sticks with Bom­bardier jet or­der, vows not to pay duty

The Expositor (Brantford) - - BUSINESS - ALICJA SIEKIERSKA asiekier­ska@post­media.com Twit­ter.com/al­ic­jaw­ithaj

Delta Air Lines Inc.’s chief ex­ec­u­tive of­fi­cer says the com­pany will not pay the 300-per-cent tar­iff to im­port 75 Bom­bardier Inc. CSeries jets, and still plans on going through with the air­craft or­der.

“We in­tend to take the air­craft,” chief ex­ec­u­tive Ed­ward Bas­tian told an­a­lysts on a quar­terly re­sults con­fer­ence call on Wednesday, adding that there may be a de­lay in air­craft de­liv­er­ies, which are sched­uled to be­gin in the spring.

“We think the air­craft needs to come to market, we be­lieve it will come to market and we be­lieve Delta will get it at the agreed con­trac­tual price. We’re not going to be forced to pay tar­iffs or do any­thing of the ilk so there should not be any con­cern on our in­vestors minds in that re­gard.”

The U.S. Depart­ment of Com­merce’s de­ci­sion to hit Bom­bardier with a 220-per-cent pre­lim­i­nary coun­ter­vail­ing duty and 80-per-cent pre­lim­i­nary an­tidump­ing duty on all im­ports of the CSeries air­craft has left the vi­a­bil­ity of Delta’s or­der for 75 jets — the largest or­der for the air­craft — in ques­tion.

Delta’s or­der for the CSeries jets is at the heart of the trade com­plaint launched by the Boe­ing Co., al­leg­ing that mas­sive gov­ern­ment sub­si­dies have al­lowed Bom­bardier to dump the air­craft into the U.S. market at an “ab­surdly low” cost.

An­a­lysts, as well as Bom­bardier and Delta, have re­peat­edly stressed that the du­ties im­posed by the Com­merce Depart­ment are pre­lim­i­nary and that the fi­nal de­ci­sion by the U.S. In­ter­na­tional Trade Com­mis­sion will be the most sig­nif­i­cant step in this case. Boe­ing will have to prove to the ITC that it was harmed as a re­sult of the CSeries sale.

Bas­tian said Delta has var­i­ous other plans in place should the fi­nal de­ter­mi­na­tion rule in Boe­ing ’s favour, but did not elab­o­rate. Still, he re­mains doubt­ful that Boe­ing will be able to show the ITC — which re­quires a higher bur­den of proof — that it suf­fered harm, when no U.S. man­u­fac­turer of­fers a prod­uct that com­petes with the CSeries.

“When we went through the (re­quest for pro­pos­als) and se­lected the CSeries, Boe­ing com­peted very hard for the or­der, ex­cept they were com­pet­ing not with their own prod­uct,” he said, point­ing to Boe­ing’s of­fer of used Brazil­ian Em­braer E-190 jets com­ing from a trade-in with Air Canada.

“As you look through this and try to see how ex­actly a harm case is going to be de­vel­oped, par­tic­u­larly to jus­tify the type of tar­iffs that are be­ing con­tem­plated, to us it’s un­re­al­is­tic and a bit non­sen­si­cal.”

Richard Aboulafia, a U.S.-based avi­a­tion an­a­lyst, said if the ITC does end up rul­ing in Boe­ing’s favour, Delta would likely have to rely on a chal­lenge at the World Trade Or­ga­ni­za­tion should it still want to pur­sue the CSeries or­der.

“I think Delta would have to count on Canada do­ing the heavy lift­ing at the WTO be­cause, ob­vi­ously, they can’t take the planes un­til this is re­solved,” Aboulafia said.

Mean­while, Boe­ing an­nounced Tues­day that it launched a pub­lic re­la­tions cam­paign to raise aware­ness in Canada of the com­pany’s “sig­nif­i­cant pres­ence and an­nual im­pact on the na­tion’s econ­omy.” The com­pany said in a news re­lease that the pub­lic out­reach cam­paign will be run on tra­di­tional and dig­i­tal me­dia out­lets.

RYAN REMIORZ/THE CANA­DIAN PRESS

Bom­bardier em­ploy­ees work on a CSeries 300 jets at the com­pany’s plant in Mirabel, Que., on Sept. 28. Bom­bardier Inc. faces du­ties of al­most 300 per cent to ex­port its CSeries com­mer­cial jet into the Amer­i­can market after the U.S. Depart­ment of Com­merce tacked on an­other 80 per cent of pre­lim­i­nary anti-dump­ing du­ties Fri­day. The de­ci­sion adds 79.82 per cent to 219.63 per cent in pre­lim­i­nary coun­ter­vail­ing tar­iffs once de­liv­er­ies to Delta Air Lines be­gin next year.

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