Bombardier tumbles on new blow to bet-the-company jet

SALES PROSPECTS FOR $6B C SERIES PROGRAMME DIM AFTER US SLAPS 220% IMPORT DUTY

Bombardier Inc plunged the most in almost two years after the US levied import duties on its priciest jet and the company missed out on a rail merger in Europe.

Sales prospects for Bombardier’s C Series jetliner, which cost $6 billion to develop, dimmed after the US Commerce Department slapped it with preliminary import duties of 220 per cent. The agency cited claims of improper subsidies after a complaint by Boeing Co.

Hours before the decision, Bombardier was left out in the cold when Germany’s Siemens spurned it as a partner for a major rail merger in favour of France’s Alstom. That left Bombardier’s train-making unit, the company’s largest, on its own against the new European giant and a larger Chinese rival.

The twin setbacks create new hurdles for Bombardier Chief Executive Officer Alain Bellemare, who is trying to turn the company around after the C Series came in more than two years late and about $2 billion over budget. Bombardier hasn’t booked a major sale of C Series jets since an April 2016 deal with Delta Air Lines that had a list value of over $5 billion.

“While Delta has publicly spoken highly about the C Series, the risk of this order being rescinded will continue to weigh on Bombardier’s share price,’’ Kevin Chiang, a CIBC World Markets analyst in Toronto, said in a note to clients yesterday. “C Series sales campaigns have likely stalled in the US until a final ruling is made.” Bombardier’s widely traded B shares dropped 10 per cent to C$2.04 at 10:02am in Toronto after sliding as much as 16 per cent for the biggest intraday decline since October 2015.

International rebukes

The Commerce Department’s ruling also rattled two of the closest US partners. Canada said the decision was aimed at shutting Bombardier out of the US aerospace market, the world’s largest. UK Prime Minister Theresa May said she was “bitterly disappointed” with the duties, which threaten jobs at a Bombardier plant in Northern Ireland.

The spat is roiling trade relations just as the US tries to renegotiate the North American Free Trade Agreement with Canada and Mexico. “Even our closest allies must play by the rules,” US Commerce Secretary Wilbur Ross said late on Tuesday in announcing the decision on Canadian jets with 100 to 150 seats.

Canada “strongly disagrees” with the US probes into its aerospace industry, Foreign Affairs Minister Chrystia Freeland said in a statement. “This is clearly aimed at eliminating Bombardier’s C Series aircraft from the US market,” said Freeland.

The import duties could be reversed by the US International Trade Commission if the trade tribunal determines that Boeing wasn’t injured by Bombardier’s jet programme. That decision is expected to be made next year. Canadian Prime Minister Justin Trudeau has said the government won’t buy Boeing military jets unless the company drops its case against Bombardier.