Boeing asks US to take action on Bombardier over C series pricing

Boeing is trying to enlist the Trump administration in its battle against Bombardier over the price the Canadian company charges for its new C series aircraft in the US market.

Boeing on Thursday asked US trade authorities to penalise Bombardier for selling its planes – which compete with some Boeing aircraft – at prices well below the cost of production in the US market, with the help of government subsidies.

The company asked the US department of commerce and the US International Trade Commission (ITC) to “take action to end Bombardier’s illegal and unfair business practices before it is too late to prevent significant harm to America’s aerospace industry and thousands of good-paying aerospace jobs”.

The announcement comes at a time of high trade tension between the new administration and the Canadian government, over the future of the Nafta and over lumber and dairy tariffs.

“Bombardier has embarked on an aggressive campaign to sell C Series aircraft into the US market at absurdly low prices – less than $20m for airplanes that cost $33m to produce, based on publicly available information. Notably, it is selling the aircraft into the United States at prices that are millions lower than those charged in Canada – the very definition of dumping,” Boeing said in a statement. Boeing has been battling Airbus in the World Trade Organisation for years over the issue of government support.

A Boeing spokesman said the timing of the announcement had nothing to do with the Trump administration’s eagerness to engage Canada over trade, but was determined by the fact that Bombardier has only recently begun putting the new aircraft into service. Boeing said it will “face a competitive threat that will only grow in magnitude as Bombardier increases its production…from seven airplanes in 2016 to between 90 and 120 airplanes by 2020”.

“Substantial government subsidies have enabled Bombardier’s predatory pricing of the C Series, which competes directly with American-made 737-700 and 737 MAX 7 airplanes. The C Series has received extensive government support totaling more than $3bn”, Boeing said in a statement, adding “The US antidumping and countervailing duty statutes are designed to address precisely this type of predatory behaviour.”

“Even if there is a valid complaint, the commercial jetliner overlap between Boeing and Bombardier is marginal at best, and Canada is a big Boeing military customer,” said Richard Aboulafia, aerospace analyst at Teal Group.

Earlier this year, Brazil opened a formal complaint against Canada at the WTO, accusing it of distorting the global aerospace industry by subsidising Bombardier.