Story updated on 28 June to note that the Commerce Department approved Boeing’s request.
The US Department of Commerce has approved a request by Boeing to delay by several months a decision about whether to hit Bombardier’s CSeries with subsidy-related import duties.
The Commerce Department had expected to issue a preliminary countervailing duty determination on 21 July, but set the date at 25 September following Boeing’s request, a Commerce Department official confirms.
In a 26 June letter to commerce secretary Wilbur Ross, a lawyer for Boeing says the investigation involves “14 categories of subsidies… that take various forms, including equity infusions, launch aid, export financing, grants, the provision of goods, tax credits and a line of credit”.
“It is important that the department have sufficient time to investigate each of these subsidies thoroughly,” says the letter. “This will require receiving, analysing and possibly collecting additional information.”
The current schedule would give regulators just 11 days to review pertinent information, adds the letter.
“This is a very routine request in a case this large and complex – there are tight deadlines for all involved,” says Boeing in an email to FlightGlobal.
Bombardier supports more time.
“We agree that Commerce should have ample time to consider all of the evidence, which will show that Boeing’s petition is without merit,” says Bombardier in an email.
In May, the Commerce Department announced it and the United States International Trade Commission were investigating Bombardier for trade violations, a move that followed a petition submitted by Boeing in April.
Boeing claimed Bombardier sold 75 CS100s to Delta Air Lines in 2016 at the artificially-low price of about $ 20 million each, therefore pushing down prices for competing aircraft, namely 737-700s and 737 Max 7. Boeing also cited Bombardier’s effort to sell the CSeries to United Airlines.
Boeing claimed CS100s actually cost $ 33 million each to produce, but said Bombardier was able to make the deal thanks largely to some $ 2.5 billion in government equity and billions more in other subsidies.
Bombardier has denied the claims, insisting that the CSeries does not compete with the larger 737-700 or 737 Max 7.
The Trade Commission completed an initial investigation in early June, finding Bombardier’s sales may have violated US industry, a ruling that enabled the Commerce Department’s inquiry to move forward.
“We find that the low prices offered by Bombardier for the CS100 in both the United and Delta sales campaigns are likely to have a significant depressing or suppressing effect on domestic prices and are likely to increase demand for further imports,” said the Trade Commission’s report.
“To compete with Delta’s low-cost fleet of CS100s, and possibly CS300s, other US airlines will likely demand similarly-low prices on 100- to 150-seat [aircraft] offered by either Boeing or Bombardier,” the report added.
Delta disclosed its CSeries pricing to the Trade Commission during a post-conference brief.
Though the report does not specify those figures, Delta agreed to be a “high-profile marquee” customer in exchange for “launch pricing” at a 20% to 30% discount,” says the report.
However, the Trade Commission concluded: “It is unclear that launch pricing can explain the substantial discount that Delta received on the CS100. Bombardier launched the CSeries in 2008, and made its first sale to Lufthansa in 2009, long before its sale to Delta in 2016.”
The Commerce Department’s investigation schedule, issued prior to Boeing’s request, calls for it to issue countervailing orders on 27 November and anti-dumping orders on 8 February 2018.
