Bombardier Is Set Back On Jetliner, Train Deal -- WSJ
By Doug Cameron and Jacquie McNish
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 27, 2017).
Bombardier Inc. received a double blow on Tuesday when a U.S. trade body slapped sanctions on its new jetliner and a long-sought deal evaporated with its main transportation partners.
U.S. trade officials said they plan to slap a large tariff on sales of a new Bombardier jetliner to U.S. airlines, inflaming a simmering trade spat with Canada that has attracted opposition from other countries.
In addition, Bombardier was left on the sidelines when Germany's Siemens AG announced that it is forming an alliance with French train maker Alstom SA to create a train business with $18 billion of annual sales. The combination creates the world's second-largest train maker. Bombardier had been in discussions with Siemens since early this year to form a similar partnership, but talks broke down in August.
The Commerce Department ruled in favor of a complaint from Boeing Co. and said it would add a 220% tariff to the cost of the new CSeries jet. The jet's sale to Delta Air Lines Inc. last year prompted a complaint from Boeing. A final decision on any duty is expected next year.
The U.S. agency's decision was widely ridiculed by aerospace-industry experts, who said cutting prices to boost sales was a common practice.
"The Commerce Department will instruct U.S. Customs and Border Protection to collect cash deposits from importers of 100- to 150-seat large civil aircraft based on these preliminary rates," the department said in a statement.
Delta, whose 75-jet order for the CSeries triggered the case, said it was confident the U.S. would take no action against it.
"Boeing has no American-made product to offer because it canceled production of its only aircraft in this size range, the 717, more than 10 years ago," it said in a statement.
The Commerce Department ruled in favor of Boeing's claims on the jet pricing despite vehement denials from Bombardier and Canadian officials.
Boeing said that "subsidies enabled Bombardier to dump its product into the U.S. market, harming aerospace workers in the United States and throughout Boeing's global supply chain."
Bombardier said it strongly disagrees with the trade ruling.
"The magnitude of the proposed duty is absurd and divorced from the reality about the financing of a multibillion-dollar aircraft program," the company said.
The Montreal-based company accused Boeing of using a "skewed process" to "stifle competition and prevent U.S. airlines and their passengers from benefiting from the CSeries."
Canadian Foreign Minister Chrystia Freeland said that Canada strongly disagrees with the U.S. tariff ruling.
"This is clearly aimed at eliminating Bombardier's CSeries aircraft from the U.S. market," she said, reflecting the strident tone her Liberal government has taken in recent weeks about Boeing's trade complaint.
The trade decision was issued after the close of markets Tuesday. Speculation about failed talks with Siemens last week sent the price of Bombardier's Class A shares tumbling more than 14% since Thursday to a low of C$2.07 Tuesday morning on the Toronto Stock Exchange. A late day rally in heavy trading Tuesday lifted the stock to C$2.30 by the day's close.
The dispute over the CSeries jet has already frozen talks on a potential multibillion-dollar deal in which Canada would buy Boeing-made combat jets, and the trade ruling comes as talks continue between the U.S., Canada and Mexico over the future of the North American Free Trade Agreement.
Write to Doug Cameron at firstname.lastname@example.org and Jacquie McNish at Jacquie.McNish@wsj.com
Corrections & Amplifications
This article was corrected Sept. 29, 2017 at 2:25 p.m. ET because an earlier version misstated the agency in the fourth paragraph. The Commerce Department, not the The International Trade Commission, ruled in favor of a complaint from Boeing Co. over alleged price subsidies for the Bombardier Inc. CSeries jetliner.
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September 27, 2017 02:47 ET (06:47 GMT)Copyright (c) 2017 Dow Jones & Company, Inc.