Delta dismisses tariffs on Bombardier deal
CEO seeks to ease investor fears as Boeing launches PR campaign
MONTREAL— Delta Air Lines says its deliveries of Bombardier CSeries aircraft may be delayed next year, but that ultimately it won’t be forced to pay the 300-percent preliminary duties recently announced by the U.S. Commerce Department.
“We will not pay those tariffs and that is very clear,” CEO Ed Bastian said Wednesday during a conference call about its third-quarter results.
He said the U.S. government’s decision is disappointing and doesn’t make a lot of sense, but that it’s still early in the process that is triggering a lot of political debate.
“We intend to take the aircraft,” he told analysts. “I can’t tell you how this is going to eventually work out. There may be a delay in us taking the aircraft as we work through the issues with Bombardier, who is being a great partner in this.”
Delta signed a deal for up to 125 CS100s in 2016. The firm order for 75 aircraft had a list price of $5.6 billion (U.S.), although large orders typically secure steep discounts. Deliveries were scheduled to begin in the spring.
“We’re not going to be forced to pay tariffs or anything of the ilk, so there should not be any concerns on our investors’ minds in that regard.”
The comments from the largest CSeries customer come a day after U.S. aerospace giant Boeing launched a public-relations campaign to remind Canadians of its economic contribution to the country.
The Chicago-based company said its multimedia efforts, which got underway on Tuesday, include traditional and digital media.
Boeing’s Canada’s managing director, Kim Westenskow, said the company contributes about $4 billion annually to Canada’s economic growth and development. That represents almost 14 per cent of Canada’s entire aerospace economic impact.
“What we accomplish together benefits Canada and the entire global aerospace industry. It is a compelling story that is overdue to be told,” she said in a news release. “Today, Boeing is the largest non-Canadian aerospace manufacturer in Canada,” Westenskow added.
Bombardier says its direct contribution to Canada’s GDP in 2014 was an estimated $8.3 billion, while it exported products worth $9.1 billion in the same year. The company said in an email Wednesday that it spent $2.1 billion last year across 1,270 suppliers in Canada — and directly employed more than 21,000 workers in the country as of December 2016, including more than 17,000 in the aerospace sector.
“It is quite ironic that Boeing is suddenly talking about its ‘commitment’ to Canada,” said Bombardier spokesperson Simon Letendre, “while moving forward with an unjustified attack against the 4,000 direct Canadi- an jobs and the more than 200 Canadian suppliers that the CSeries program alone supports.
“If Boeing really cares about its relationship with Canada, it should simply withdraw its complaint.”
In response to the trade challenge to Bombardier, the federal government has threatened to cancel the planned purchase of 18 Boeing Super Hornets to temporarily augment Canada’s aging fleet of CF-18s.
Bombardier Inc. last week accused the Trump administration of overreach by siding with Boeing in its bid to shut the CSeries commercial jet out of the world’s largest airline market by quadrupling the price of any of the planes sold in the U.S. The U.S. Commerce Department added 79.82 per cent in preliminary anti-dumping duties to 219.63 per cent in preliminary countervailing tariffs once deliveries to Delta Air Lines begin next year.
Boeing said it welcomed the decision, affirming its view that Bombardier sold the CSeries to Delta at prices below production cost to illegally grab market share. Bombardier has repeatedly stressed that Americans will be hurt by the tariffs because more than half the content on the 100- to 150-seat CSeries is sourced by U.S. suppliers. The program is expected to generate more than US$30 billion in business over its life and support more than 22,700 American jobs in 19 states. With files from Michael Lewis