I’ll admit, I didn’t see this coming. Bombardier, an airplane manufacturer headquartered in Canada, recently was dealt a crushing blow when Boeing claimed they were being improperly subsidized. Boeing believed that the Canadian company was selling their new C Series plane to Delta below the cost of the actual airframes. Early in the process, the US Department of Commerce suggested at tariff of almost 300% on the planes from Bombardier.
Already struggling to gain traction with the C Series and deep in debt, this was seen as something of a fatal blow for Bombardier. Seemingly as a result of the ruling, Bombardier and Airbus quickly agreed to a structure where Airbus could assume the C Series manufacturing and marketing. This would allow Bombardier to survive, though with a much smaller “win”.
In a surprising turn of events, the International Trade Commission has ruled against Boeing. There was plenty of reason to think Boeing might not prevail in their case here. But, the swiftness of the vote is telling. In less than 5 minutes the 4-member panel voted unanimously against Boeing.
According to Wandering Aramean, Airbus and Bombardier are still proceeding with their plans to have Airbus take over the C Series project. That’s not surprising. I imagine that the deal already has penalties if Bombardier were to pull out of the pact. There are real benefits to having Airbus lead the C Series program. I still think the deal significantly limits Bombardier’s upside. For a smaller aviation company that tried to break into the big leagues, maybe that’s an acceptable outcome.
Bombardier shot for the moon with the C Series. It’s a wonderful plane that I can’t wait to fly. Built for customer comfort, we can only hope it will be around for decades like the workhorse 737. Airbus and Boeing have been doing everything they can to chase Bombardier out of their sandbox since the C Series came to market. Now, Bombardier has one of the bullies on their side.
Boeing, on the other hand, took something of a beating here. They were already getting killed in the court of public opinion. Boeing also lost a sizable military order from Canada. They don’t really have a plane that competes with the C Series right now. If successful, the C Series is likely to compete with Boeing. Growing the frame a bit bigger starts to creep into Boeing’s 737 territory. As a long-term Boeing shareholder, I’m not thrilled with their actions here. Boeing has an incredible backlog of popular planes like the 737 and 787. I’m hoping they focus more efforts on innovation than of litigation going forward.
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