Bombardier braces for hefty duty hit on CSeries aircraft
MONTREAL — Bombardier Inc. said it won’t be shocked if it gets hit with another large tariff next in a U.S. duty decision Wednesday after being surprised by massive preliminary duties unveiled against its CSeries commercial jet this week.
The Montreal-based aerospace company said Thursday it is prepared for an “absurd” anti-dumping duty after the Department of Commerce announced a nearly 220 per cent countervailing duty.
“We expect it to be a significant number. Pick a number. It makes no sense,” Colin Bole, Bombardier’s sales chief for commercial aircraft, said in an interview. “I think the Department of Commerce and Boeing have not exactly endeared themselves with a rational and sensible approach here.”
The U.S. government is scheduled to announce its preliminary anti-dumping decision on Boeing’s petition next Wednesday. The Chicago aircraft manufacturer has requested 79 per cent in anti-dumping, the same amount it requested in countervailing duties.
“We thought 79 was pretty outrageous, this is beyond silly,” he said of the 220 per cent countervailing decision.
The department’s preliminary findings said Bombardier benefited from improper government subsidies, giving it an unfair advantage when selling its CSeries jets south of the border.
Bombardier has repeatedly stressed that Americans will be hurt by the tariffs because more than half the content on the CSeries is sourced by U.S. suppliers, including Pratt & Whitney engines. The program is expected to generate more than $30 billion US in business over its life and support more than 22,700 American jobs in 19 states.
Bole said the exorbitant duties are unfounded and the company is confident they will be reversed in final decisions in coming months. He said Boeing can’t justify its claim of being harmed since it doesn’t make a plane the size of the CS100.
Air Canada CEO Calin Rovinescu lent his support to the company, telling the Montreal Board of Trade on Thursday that he found the ruling “troubling” because of its effect on stifling innovation and competitiveness.
Canada’s largest airline has ordered 45 CSeries aircraft with options for 30 more that will allow it to fly to new destinations after deliveries begin in 2019. “The CSeries is the best-in-class for its size and we see it comfortably co-existing in our fleet alongside our new Boeing 737 MAX aircraft,” he said.
Quebec Premier Philippe Couillard visited workers at the CSeries assembly plant in Mirabel Thursday to convey his government’s support of the aircraft program against Boeing’s petition.
“It’s an unacceptable attack toward an industry, a province and a country and we shall prevail. What’s happening now goes much beyond Bombardier,” he said inside a large hangar.
Couillard said he won’t heed Manitoba Premier Brian Pallister’s call for cooler heads and less overheated rhetoric in the burgeoning aerospace trade war. “I will not tone down. I will tone up if I need to do it,” he told reporters. “I will fight for Quebec.”
He repeated his demand that “not a bolt, not a part, of course not a plane of Boeing” should enter Canada until the conflict is resolved.
Ottawa had planned to buy 18 Super Hornets from Boeing to fill what they claim is a critical shortage of fighter jets, but have since threatened to go elsewhere over the Bombardier dispute.
Bole said Bombardier’s sales campaigns aren’t being harmed by the duty decision and the company still expects to land some new orders later this year.
Bombardier has estimated that North America will account for about 2,000 of the 6,800 100- to 150-seat planes that will be sold around the world over the next 20 years.
Bole said Bombardier doesn’t expect to feel any extra pressure to lower CSeries prices because buyers may sense the company will be desperate to conclude a deal.
He said Bombardier is open to discussions with Boeing but declined to say what would be required to strike a deal to end the dispute. Nor would he disclose the contingencies it will offer Delta Air Lines, which is slated to begin receiving CS100s next spring.
Bombardier shares regained some ground Thursday, closing up 5.24 per cent at $2.21 on the Toronto Exchange.