Trade wars hurt almost everyone. America seems to want a trade war with current policies. Troubling times for all.

BBD only has a chance to proof that they are singled out unfairly. If they can show at least partly practices in Brazil, Europe, Japan and China the pressure would mount.

chiawei wrote:

chrisp390 wrote:

Where are the investigations into COMAC who are getting BILLIONS from the Chinese government to develop a DIRECT competitor to the Boeing 737?

The problem is comac does not have a us airlines buying it.

It would be interesting if an us airline buys it.

And now Boeing and Comac are partners and building an 737 completion center in China.

danj555 wrote:

Yo 80% on any bombardier plane..... 300% on C series. geez.

Is this a trump thing? I don't want to hear trump administration, or branch of gov't led by trump. His words, his mouth. Is this him?

Has there been a precedent? It sorta sounds like out of nowhere.

220% countervailing on any Canadian plane with 100-150 seats and range >2900nm (basically CSeries unless somebody decides to move assembly to Canada)
+80% anti-dumping for CSeries

On the countervailing against Canada, calculation includes incentives provided by UK in N Ireland.

Yes, but I can tell you that it is a minor alteration that Commerce would likely determine to constitute circumvention of the order.

Let me give you a few examples of the "tricks" that importers have tried to play to avoid duties, and the response by Commerce.

#1 Order on polyethylene carrying bags (the plastic bags at the grocery store). The scope mentioned bags with handles (to distinguish them from draw string closure bags). After the order went in place, an importer brought them into the USA without the handles (they punched the handles in after importation). Commerce found this to be circumvention.

#2 Steel cases: orders on a lot of steel cases have chemistry cutoffs (boron, chrome, etc.). If the order said steel with no more than 0.6% chrome content, importers would bring in steel with a chrome content of 0.61%. Commerce finds this to be circumvention.

#3 Bicycles. Order covered bicycles. Importer brought the bicycles in without the tires and affixed the tires after importation. Circumvention again.

Simply derating one company's order without substantial reworking of the product is only going to draw scrutiny from Commerce.

I'd say this is all quite the lesson for the Chinese and Russians.

While its too late for the MS-21 and C919, I wouldn't be surprised if there were very few US suppliers on their new widebody. Why bother dealing with US suppliers when the laws that bound them are made by irrational and impulsive decisions?

Canada should build a wall and make the U.S. pay for it!

Skywatcher wrote:

Canada should build a wall and make the U.S. pay for it!

nice one!

The design is capable of being stretched to compete with the A320 and 737 but the manufacturer had originally decided to be a niche player and not compete with the duopoly.
An aircraft which has been pitched not to compete with the A320 and 737 by design may from February be unsaleable in the U.S.
What do Bombardier and its primary shareholder do then?
1) Close it down and cut their losses and write off their sunk costs and suffer all the political loss of face associated with same.
2) Invest in a cheap stretch which will deliver a plane which is cheaper than the duopoly in the most buoyant market segment worldwide.
3) Sell it off and the buyer does no. 2 instead.

If the CS100 and CS130 can't be sold in the U.S. then I predict that the CS500 and CS700 owned by Bombardier or another will arrive years earlier than it otherwise would have arrived and years before the Duopoly have anything competitive on an efficency basis. The Duopoly can probably hold most of their market share by selling cheap but that doesn't make them or their shareholders wealthy.

Any rumors on what DL planning to do?

LockheedBBD wrote:

iamlucky13 wrote:

If DoC found Bombardier's lack of responses contemptuous, I missed that reporting.

http://enforcement.trade.gov/download/f ... 100617.pdf

Commerce based Bombardier, Inc.’s (Bombardier) preliminary dumping margin on adverse facts available (AFA) because Bombardier failed to provide information requested by Commerce’s AD questionnaire. The Petitioner alleged one dumping margin in the petition. As AFA, Commerce applied the sole dumping margin calculated in the petition for Canadian exports of aircraft, which is 79.82 percent. This rate will apply to all other producers/exporters as well.

Without having added commentary, I'm not sure if you intended that to counter my statement or support it, but it seems to support what I said. Specifically, it says what washingtonflyer indicated: the "adverse facts available" were the only calculation Commerce had to go with. It gives no indication that the rate was chosen was escalated as punitive measure due to non-response.

dtw2hyd wrote:

Any rumors on what DL planning to do?

I'd guess at this point they're not making any major changes to their plans, since the final determinations are still months away, but I wouldn't be surprised if they're having discussions with Bombardier about pushing back delivery dates to wait and see what comes out of this, holding out hope the final determinations are different than the preliminaries, but giving themselves time for proper fleet planning if not.

I do not have a thorough picture of the procedure from here, but I still presume that at some point, if they don't prevail with the argument the sales have not yet actually occurred, Bombardier will change tactics before it's too late and challenge the penalty numbers.

In that case, I could foresee Delta potentially still being will to take delivery if a final penalty in the rough ballpark of 20% is ultimately applied, especially since washingtonflyer indicated the dumping penalty phases out if no future dumping takes place.

SheikhDjibouti wrote:

bigjku wrote:

If the US subsidized a more efficient but otherwise uneconomical train engine...

More efficient, but otherwise uneconomical?
I am intrigued. How does that add up?

bigjku wrote:

It’s pretty simple. If the cost of production and the cost of R&D make the acquisition cost increase too much an operator then an operator can’t make back the acquisition premium over their existing cheaper options.

It's pretty simple you say. And yet I still don't understand it.
If the cost of production and the cost of R&D make the acquisition cost increase too much .... then despite the subsidies, the operator will not buy it, and it isn't a threat to the (cheaper) locally produced equivalent.
I'm sure the US is welcome to dump as many trains (or aircraft) in that category as they like, on any country. Quite who will buy them if they are more expensive, I can't say

I must be missing something here. Again, please help me understand your point.

Re: Boeing finding the math on a new aircraft wouldn't make sense... They had an additional variable they may have been a key factor - they wouldn't want to hurt 737 sales, and any 737 profits which would be forgone due to a Boeing 110 seater would make the 110 seater's additional effective profits much less.

Pretty much the reason the already paid for 717 got killed off.

dtw2hyd wrote:

Any rumors on what DL planning to do?

It been crickets so far, other than a statement that their orders wouldn't be affected, and another statement calling preliminary ruling "bizaare."

luv2cattlecall wrote:

...Pretty much the reason the already paid for 717 got killed off.

They could have given the program to some emerging domestic aviation markets like China or India. Let them invest a couple of $$Billion to bring it up to date.

I hope DOC knows better than me in what is good for the USA as a country.

But Boeing has been very unfair to DL, first by selling incentivized/discounted WB planes to state-owned already subsidized foreign carriers, enabling them to dump capacity and lower prices on US3 and now blocking DL from buying the planes they wanted. Not fair.

dtw2hyd wrote:

luv2cattlecall wrote:

...
But Boeing has been very unfair to DL, first by selling incentivized/discounted WB planes to state-owned already subsidized foreign carriers, enabling them to dump capacity and lower prices on US3 and now blocking DL from buying the planes they wanted. Not fair.

Some might say DL has been unfair to Boeing by not making the 787 part of the wide body order 3 years ago and by cancelling the 787-8.

But I hope the tariff is dropped and DL gets at least 125 C series.

Having looked at the reaction to these subsidies by the aviation and business industry leaders over the weekend, it seems that this is will turn out to be a Public Relations nightmare for Boeing. Their reputation for being competitive and innovative will be replaced by a reputation of being a bully and hypocritical. Boeing's reputation may never be ever to fully recover from this. Then there are the consequences of this ruling.

Here is some of what Boeing and the US government have managed to do:
- Stifling innovation and competition in the aerospace/aviation industry.
- Anger several major US carriers such as Delta, JetBlue, Spirit and Sun Country.
- Put US jobs at risk (50% of CSeries components come from US manufacturers).
- Denying the opportunity of the US travelling public to pay less for their airline ticket.
- Anger the Canadian and UK governments and further souring relations with two of the US's biggest allies and trading partners.
- Give Airbus a potential boost in orders (don't see UK carriers ordering Boeing products anytime soon because of this).
- But a $5 billion Super Hornet purchase from Boeing by the Canadian government in serious jeopardy.

Then there is the experts in the media and in the industry in the US.

"Boeing has no idea ... how much it costs Bombardier to make each jet. Nor does Bombardier. The Canadian plane maker has delivered fewer than 20 planes. And tallying production costs of something as advanced as a jetliner takes a lot of repetition before a "learning curve" on spending is clear. This is total Looney Tunes, it doesn't make any frickin' sense whatsoever. You cannot establish the facts that Boeing asserts."
Adam Pilarski, Senior Vice President at aerospace consultancy Avitas
and former chief economist for McDonnell Douglas, as quoted in CNN Money

From Global News
"Bombardier got subsidies? Boeing received $64B from the U.S. government"
https://globalnews.ca/news/3773916/bomb ... subsidies/

From the Washington Examiner
"The latest US move on planes is a train-wreck"
http://www.washingtonexaminer.com/the-l ... le/2635958

From the Washington Examiner
"Canada is trying to give us cheaper products, but the U.S. Commerce Department is messing it up"
http://www.washingtonexaminer.com/canad ... le/2636295

From Forbes
Boeing Takes Trade Law Abuse To A Whole New Level
https://www.forbes.com/sites/danikenson ... 8c926210a5

The Economist
"Boeing takes off on a flight of hypocrisy against Bombardier"
https://www.economist.com/news/business ... -hypocrisy

CNN Money
"This plane may vastly improve flying in the U.S., if it doesn't first start a trade war"
http://money.cnn.com/2017/09/22/news/co ... index.html

CAS - Consumer Action for a Strong Economy
"Boeing Abuses Trade Laws to Ground Their Competition
It is abundantly clear that Boeing is abusing trade laws to rid itself of a business competitor while sticking it to the consumers of air travel." "If Boeing is able to thwart an innovator like Bombardier in a market segment that it chose not to serve, it will be free to stifle further advances in airplane design."

ACI - The American Consumer Institute Center for Citizen Research
"Boeing's Trade Complaint Harms American Consumers
What becomes clear when looking at the underlying facts of this case is that it is not really about government support for Bombardier, but rather an attempt by Boeing to stymie a potential future competitor irrespective of the additional cost or convenience to the American consumer."

I am quite confident that this absurd ruling will be overturned. Delta seems confident of this as well and they are apparently in the final stages of finishing up the Full Flight Simulator that will train their pilots on the CSeries.

YULspotter

YULspotter wrote:

- Give Airbus a potential boost in orders (don't see UK carriers ordering Boeing products anytime soon because of this).

Why wouldn't UK carriers order Boeing products though? No UK carriers are state owned, the government can't stop them and there is no way in hell the government will slap heavy tariffs on Boeing aircraft.

UltimoTiger777 wrote:

and there is no way in hell the government will slap heavy tariffs on Boeing aircraft.

Why not?

A380 - Rolls Royce Engine
A350 - Rolls Royce Engine
A330 - Rolls Royce Engine

They have other vested interests besides the ~1-2000 jobs in Belfast dependent on CSeries.


If the Irish government were to take a line on it - you've a helluva lot of aircraft registered in Ireland. What would that do to Boeing? It only has to make a few sales fall the other way without being prohibitive for the airlines.

Amiga500 wrote:

UltimoTiger777 wrote:

and there is no way in hell the government will slap heavy tariffs on Boeing aircraft.

Why not?

A380 - Rolls Royce Engine
A350 - Rolls Royce Engine
A330 - Rolls Royce Engine

Boeing 777 - Rolls Royce Engine
Boeing 787 - Rolls Royce Engine

Not to mention this...

https://www.bloomberg.com/news/articles ... boeing-jet

Not sure how the import duties would work for leasing deals. Let's say BBD sets up a leasing unit JV with DL in one tax heavens.
The Leasing company takes ownership of the aircraft as price agreed in the original deal.

Now what if the Leasing unit "Leases" the aircraft $1/month which would set the duties at $3.

Sure the Leasing unit will loose a lot of money on paper, but Does U.S. or ITC has any jurisdictions on enforcing price floor for aircraft leasing? Keep in mind that no US based leasing company can Lease Cseres to Delta since no one has ordered any.

Amiga500 wrote:

Why not?

A380 - Rolls Royce Engine
A350 - Rolls Royce Engine
A330 - Rolls Royce Engine

They have other vested interests besides the ~1-2000 jobs in Belfast dependent on CSeries.


If the Irish government were to take a line on it - you've a helluva lot of aircraft registered in Ireland. What would that do to Boeing? It only has to make a few sales fall the other way without being prohibitive for the airlines.

Which begs the question why the European market is not supporting the C-Series, why make the American market so important, to my knowledge there is no Scope Clause in Europe so the American restrictions on those a/c do not apply. The compromises made by OEM's on these type a/c are to avoid US Scope clauses, the rest of the world is a much larger market than the US so the fixation on the US market is troubling, especially when more and more focus is now being given to the massive trade deficits that the US maintains with the rest of the world, including Europe.

UltimoTiger777 wrote:

Amiga500 wrote:

UltimoTiger777 wrote:

and there is no way in hell the government will slap heavy tariffs on Boeing aircraft.

Why not?

A380 - Rolls Royce Engine
A350 - Rolls Royce Engine
A330 - Rolls Royce Engine

Boeing 777 - Rolls Royce Engine
Boeing 787 - Rolls Royce Engine

Not to mention this...

https://www.bloomberg.com/news/articles ... boeing-jet

777 - No 200ERs have been built in the last 3/4 years. Its a GE exclusive now.
787 - There is more UK content in the A350 (RR engines are exclusive and the wings are from Filton). Given the yardstick used for CSeries, Airbus would have a helluva case on selling below cost and dodgy funding to support that. Boeing are firing stones from the roof of a big glass greenhouse.

YULspotter wrote:

Having looked at the reaction to these subsidies by the aviation and business industry leaders over the weekend, it seems that this is will turn out to be a Public Relations nightmare for Boeing. Their reputation for being competitive and innovative will be replaced by a reputation of being a bully and hypocritical. Boeing's reputation may never be ever to fully recover from this. Then there are the consequences of this ruling.

Here is some of what Boeing and the US government have managed to do:
- Stifling innovation and competition in the aerospace/aviation industry.
- Anger several major US carriers such as Delta, JetBlue, Spirit and Sun Country.
- Put US jobs at risk (50% of CSeries components come from US manufacturers).
- Denying the opportunity of the US travelling public to pay less for their airline ticket.
- Anger the Canadian and UK governments and further souring relations with two of the US's biggest allies and trading partners.
- Give Airbus a potential boost in orders (don't see UK carriers ordering Boeing products anytime soon because of this).
- But a $5 billion Super Hornet purchase from Boeing by the Canadian government in serious jeopardy.

Then there is the experts in the media and in the industry in the US.

"Boeing has no idea ... how much it costs Bombardier to make each jet. Nor does Bombardier. The Canadian plane maker has delivered fewer than 20 planes. And tallying production costs of something as advanced as a jetliner takes a lot of repetition before a "learning curve" on spending is clear. This is total Looney Tunes, it doesn't make any frickin' sense whatsoever. You cannot establish the facts that Boeing asserts."
Adam Pilarski, Senior Vice President at aerospace consultancy Avitas
and former chief economist for McDonnell Douglas, as quoted in CNN Money

From Global News
"Bombardier got subsidies? Boeing received $64B from the U.S. government"
https://globalnews.ca/news/3773916/bomb ... subsidies/

From the Washington Examiner
"The latest US move on planes is a train-wreck"
http://www.washingtonexaminer.com/the-l ... le/2635958

From the Washington Examiner
"Canada is trying to give us cheaper products, but the U.S. Commerce Department is messing it up"
http://www.washingtonexaminer.com/canad ... le/2636295

From Forbes
Boeing Takes Trade Law Abuse To A Whole New Level
https://www.forbes.com/sites/danikenson ... 8c926210a5

The Economist
"Boeing takes off on a flight of hypocrisy against Bombardier"
https://www.economist.com/news/business ... -hypocrisy

CNN Money
"This plane may vastly improve flying in the U.S., if it doesn't first start a trade war"
http://money.cnn.com/2017/09/22/news/co ... index.html

CAS - Consumer Action for a Strong Economy
"Boeing Abuses Trade Laws to Ground Their Competition
It is abundantly clear that Boeing is abusing trade laws to rid itself of a business competitor while sticking it to the consumers of air travel." "If Boeing is able to thwart an innovator like Bombardier in a market segment that it chose not to serve, it will be free to stifle further advances in airplane design."

ACI - The American Consumer Institute Center for Citizen Research
"Boeing's Trade Complaint Harms American Consumers
What becomes clear when looking at the underlying facts of this case is that it is not really about government support for Bombardier, but rather an attempt by Boeing to stymie a potential future competitor irrespective of the additional cost or convenience to the American consumer."

I am quite confident that this absurd ruling will be overturned. Delta seems confident of this as well and they are apparently in the final stages of finishing up the Full Flight Simulator that will train their pilots on the CSeries.

YULspotter

While I agree about the PR optics, will that really impact Boeing much? Most pax don't know what aircraft they're scheduled on, and even if they do, I doubt they'll care enough to pick a different flight (unless it's a CRJ vs an E175 or something)

par13del wrote:

Amiga500 wrote:

Why not?

A380 - Rolls Royce Engine
A350 - Rolls Royce Engine
A330 - Rolls Royce Engine

They have other vested interests besides the ~1-2000 jobs in Belfast dependent on CSeries.


If the Irish government were to take a line on it - you've a helluva lot of aircraft registered in Ireland. What would that do to Boeing? It only has to make a few sales fall the other way without being prohibitive for the airlines.

Which begs the question why the European market is not supporting the C-Series, why make the American market so important, to my knowledge there is no Scope Clause in Europe so the American restrictions on those a/c do not apply. The compromises made by OEM's on these type a/c are to avoid US Scope clauses, the rest of the world is a much larger market than the US so the fixation on the US market is troubling, especially when more and more focus is now being given to the massive trade deficits that the US maintains with the rest of the world, including Europe.

Its not like Airbus/Europe doesn't see the C-series as a threat too. There is a reason they launched the A320Neo when they did. As for why the fixation on the US market... look at at where most of the ~<115 seat jets are sold despite the scope clauses in the US. The US domestic market is far larger than the intra-European market, US airlines have domestic subfleets that rival the size of EU carrier's entire fleets. It doesn't get much better when you turn to Latin America or Africa, and Asia is heavily focused on widebodies like the A330.

Airbus/Continental Europe is not going to get involved in this mess, because truthfully they want to see BBD hobbled just as much as Boeing does. They certainly are not going to put tariffs on Boeing's jets just because (you think EU airlines will be happy to know that Airbus is their only legitimate option for 150+ seat jets?). The UK is only involved because of the production facilities in Northern Ireland.

Polot wrote:

Airbus/Continental Europe is not going to get involved in this mess

IMO, the danger for Airbus is not BBD, but Boeing using any favourable precedent established in this farce to keep Airbus out down the road.

Airbus do have an assembly line for single aisle in Mobile, but that wouldn't cover any A330/A350 sales. The A330 is probably too old for Boeing to bat away, but the A350 isn't.

Furthermore, if Boeing were to do an MoM, and Airbus responded with a new single aisle (lets call it A30X), Boeing could attempt to use the courts to defer any introduction of A30X into the US for a few years until they could get meat on an alternative rather than a few powerpoint slides.

AirbusCanada wrote:

Not sure how the import duties would work for leasing deals. Let's say BBD sets up a leasing unit JV with DL in one tax heavens.
The Leasing company takes ownership of the aircraft as price agreed in the original deal.

Now what if the Leasing unit "Leases" the aircraft $1/month which would set the duties at $3.

Sure the Leasing unit will loose a lot of money on paper, but Does U.S. or ITC has any jurisdictions on enforcing price floor for aircraft leasing? Keep in mind that no US based leasing company can Lease Cseres to Delta since no one has ordered any.

Any good that enters the United States has to pay duties based on the value of the good. Matters not who owns it; matters not if the item flew through Greenland first.

This is a Canadian built CS-100 entering the customs territory of the United States for use in the United States. The importer is going to have to pay the duty on it.

Full stop.

Amiga500 wrote:

Polot wrote:

Airbus/Continental Europe is not going to get involved in this mess

IMO, the danger for Airbus is not BBD, but Boeing using any favourable precedent established in this farce to keep Airbus out down the road.

Airbus do have an assembly line for single aisle in Mobile, but that wouldn't cover any A330/A350 sales. The A330 is probably too old for Boeing to bat away, but the A350 isn't.

Furthermore, if Boeing were to do an MoM, and Airbus responded with a new single aisle (lets call it A30X), Boeing could attempt to use the courts to defer any introduction of A30X into the US for a few years until they could get meat on an alternative rather than a few powerpoint slides.

Anyone who thinks that Airbus isn't concerned about BBD is delusional. Airbus and Boeing are very comfortable at maintaining the current duopoly. There is close to zero chance that Airbus would go under; both A & B have been using this against each other for years, and both are still around. But BBD's subsidies are a lot more blatant (its done so openly that they can't deny it) than what Airbus and Boeing had over the past decade, so that is the difference between the usual A & B trade issues and the one BBD is having now.

AirbusCanada wrote:

Not sure how the import duties would work for leasing deals. Let's say BBD sets up a leasing unit JV with DL in one tax heavens.
The Leasing company takes ownership of the aircraft as price agreed in the original deal.

Now what if the Leasing unit "Leases" the aircraft $1/month which would set the duties at $3.

Sure the Leasing unit will loose a lot of money on paper, but Does U.S. or ITC has any jurisdictions on enforcing price floor for aircraft leasing? Keep in mind that no US based leasing company can Lease Cseres to Delta since no one has ordered any.

What if Delta and a Canadian carrier (WestJet...I know....LONG shot) were to set up a JV that saw Delta provide the aircraft, flown by Canadian crews and do all the trans-border flights, booked by both carriers as code-share? I think 75 frames would be way too much, but you never know, right? Do the same thing with a south American carrier too?

If anyone can explain, there are a few things I don't quite understand:
1. How can they decide on a 300% (or future to be confirmed rate) on a per unit cost that is undecided (nothing delivered/invoiced yet)? If list is $80million, but sold for $20 (or $30), how does taxing it make it a fair transaction?
2. How did they decide the rate without knowing what the sold unit cost was. Eg., If sold for $20m 300% may be appropriate, but if sold for $30m then 200%, etc.
3. Building on above....if BBD and Delta revise they price to say $35m each, would the tariff still apply as this is now priced to market comparables?
4. Building on above again...does BBD charge a higher amount to make a 'fair payment', but offer service work they can charge to BBD for other jobs at a much lower rate to balance off long term?

Another idea - if the Delta jets are going to have 108 seats, why don't they reduce them to 99 on delivery to get under the size being looked at and then switch seats out when everything is all said and done (assuming tariffs lifted)? Add extra first class, or economy plus? Or even just a larger in-cabin additional carry-on storage area. I'm sure BBd would pick up the tab on swapping seats over not delivering the jets?

Can someone answer this question for me. Why did Bombardier go so low on the pricing to Delta. Seems to me Boeing had to act if not for themselves to help protect Southwest.

jeffrey0032j wrote:

Anyone who thinks that Airbus isn't concerned about BBD is delusional.

Where did I say they were not concerned?

jeffrey0032j wrote:

Airbus and Boeing are very comfortable at maintaining the current duopoly.

How does the currently duopoly work in a post-2020 world with the MS-21 and C919?

jeffrey0032j wrote:

But BBD's subsidies are a lot more blatant (its done so openly that they can't deny it) than what Airbus and Boeing had over the past decade,

Utter rubbish. They are no more blatant than the billions in tax breaks Boeing have got for the 787 and are getting for the 777X.

The only reason they are in court is because they didn't take care to disguise it enough for liars within the US legal system.

racercoup wrote:

Can someone answer this question for me. Why did Bombardier go so low on the pricing to Delta. Seems to me Boeing had to act if not for themselves to help protect Southwest.

BBD supposedly priced the CS100 to Delta at ~$27-29m USD each. [Disregard the Boeing alleged price, its lies.]

Boeing supposedly priced the 737-700 to United at ~$22m USD each.

jalarner wrote:

If anyone can explain, there are a few things I don't quite understand:
1. How can they decide on a 300% (or future to be confirmed rate) on a per unit cost that is undecided (nothing delivered/invoiced yet)? If list is $80million, but sold for $20 (or $30), how does taxing it make it a fair transaction?
2. How did they decide the rate without knowing what the sold unit cost was. Eg., If sold for $20m 300% may be appropriate, but if sold for $30m then 200%, etc.
3. Building on above....if BBD and Delta revise they price to say $35m each, would the tariff still apply as this is now priced to market comparables?
4. Building on above again...does BBD charge a higher amount to make a 'fair payment', but offer service work they can charge to BBD for other jobs at a much lower rate to balance off long term?

Another idea - if the Delta jets are going to have 108 seats, why don't they reduce them to 99 on delivery to get under the size being looked at and then switch seats out when everything is all said and done (assuming tariffs lifted)? Add extra first class, or economy plus? Or even just a larger in-cabin additional carry-on storage area. I'm sure BBd would pick up the tab on swapping seats over not delivering the jets?

1. Good question. There is an 800+ postings thread around here somewhere that is trying to resolve that issue.
2. Another good question - see above
3. I'm sure washingtonflyer can answer that better than I can
4. he will also blow that idea out of the water

Regarding reducing the seats to 99 - I suggest you read back a few posts (try the search function). There is a proper name for that kind of circumvention, and I'm fairly sure w..flyer has already covered that too. Several times.

Next?

jalarner wrote:

AirbusCanada wrote:

Not sure how the import duties would work for leasing deals. Let's say BBD sets up a leasing unit JV with DL in one tax heavens.
The Leasing company takes ownership of the aircraft as price agreed in the original deal.

Now what if the Leasing unit "Leases" the aircraft $1/month which would set the duties at $3.

Sure the Leasing unit will loose a lot of money on paper, but Does U.S. or ITC has any jurisdictions on enforcing price floor for aircraft leasing? Keep in mind that no US based leasing company can Lease Cseres to Delta since no one has ordered any.

What if Delta and a Canadian carrier (WestJet...I know....LONG shot) were to set up a JV that saw Delta provide the aircraft, flown by Canadian crews and do all the trans-border flights, booked by both carriers as code-share? I think 75 frames would be way too much, but you never know, right? Do the same thing with a south American carrier too?

If anyone can explain, there are a few things I don't quite understand:
1. How can they decide on a 300% (or future to be confirmed rate) on a per unit cost that is undecided (nothing delivered/invoiced yet)? If list is $80million, but sold for $20 (or $30), how does taxing it make it a fair transaction?

The CVD rate is based on a ratio of the subsidy benefits to total sales in 2016. The AD rate is based on Boeing's estimated cost of production and estimated sales price for the CS-100 as calculated in the petition. Since BBD refused to provide questionnaire data in the AD investigation, DOC adopted the petition rate as the best information otherwise available.

jalarner wrote:

2. How did they decide the rate without knowing what the sold unit cost was. Eg., If sold for $20m 300% may be appropriate, but if sold for $30m then 200%, etc.

See above.

jalarner wrote:

3. Building on above....if BBD and Delta revise they price to say $35m each, would the tariff still apply as this is now priced to market comparables?

They might eliminate the dumping rate (possibly) but they still have to pay duties for close to 2.5 years before Commerce would get to that determination. The CVD rate is much more difficult to make go away through price adjustments. The subsidy disappears depending on the value of the benefit and BBD's total sales in a given year.

jalarner wrote:

4. Building on above again...does BBD charge a higher amount to make a 'fair payment', but offer service work they can charge to BBD for other jobs at a much lower rate to balance off long term?

Classic case of customs fraud. CBP is aware of these types of schemes and CBP's Office of Regulatory Audit loves to chase this type of thing down.

jalarner wrote:

Another idea - if the Delta jets are going to have 108 seats, why don't they reduce them to 99 on delivery to get under the size being looked at and then switch seats out when everything is all said and done (assuming tariffs lifted)? Add extra first class, or economy plus? Or even just a larger in-cabin additional carry-on storage area. I'm sure BBd would pick up the tab on swapping seats over not delivering the jets?

Because the scope contemplates the theoretical capacity of the aircraft, not how one decided at the end of the day to fill out the aircraft.

jalarner wrote:

What if Delta and a Canadian carrier (WestJet...I know....LONG shot) were to set up a JV that saw Delta provide the aircraft, flown by Canadian crews and do all the trans-border flights, booked by both carriers as code-share? I think 75 frames would be way too much, but you never know, right? Do the same thing with a south American carrier too?

DL wants the plane for the domestic market, not transborder flights (both north and south) which would tie up maybe 15 planes max (aka, not enough to be worth it). Needs to be American to do that.

BBD should just assemble the CS sold in the USA in Wichita, problem solved.

mjoelnir wrote:

BBD should just assemble the CS sold in the USA in Wichita, problem solved.

This is a possibly solution provided that the goods entering from Canada don't meet the definition of partially assembled. That becomes a factual determination for Commerce. You still run the risk of a circumvention action under section 781(a) of the tariff act. The main issue is going to be whether the operations are minor or significant.

mjoelnir wrote:

BBD should just assemble the CS sold in the USA in Wichita, problem solved.

I don't think the Canadian government invested billions to bail out Bombardier to see the jets manufactured in the US

washingtonflyer wrote:

mjoelnir wrote:

BBD should just assemble the CS sold in the USA in Wichita, problem solved.

This is a possibly solution provided that the goods entering from Canada don't meet the definition of partially assembled. That becomes a factual determination for Commerce. You still run the risk of a circumvention action under section 781(a) of the tariff act. The main issue is going to be whether the operations are minor or significant.

Than I would assume the case for putting customs on USA made airplanes by Canada would become quite strong. There is an agreement in place that aircraft parts are not taxed. It would be a clear signal that the USA does want a trade war.

Indeed the agreement on civil aircraft contemplates standard duty elimination. The agreement does not forbid the imposition of remedial tariffs.

racercoup wrote:

I don't think the Canadian government invested billions to bail out Bombardier to see the jets manufactured in the US

Assuming C-Series is a lost cause for Canada and any US State will give $3B easily to start a FAL.

Boeing's next big fight will be with UTC ie., about Rockwell acquisition. So UTC should get into civil aviation.

The final assembly in Wichita is interesting considering 55% of the parts content of a CS100 is already US made. How does BBD currently ship the wings fom Belfast? Wichita is far away from sea ports and the either fly them in or by rail from a port.

If Bombardier trugly thinks Delta is a spring board for fabulous success for the C-Series they'll need a second line anyways.

SteelChair wrote:

dtw2hyd wrote:

Any rumors on what DL planning to do?

It been crickets so far, other than a statement that their orders wouldn't be affected, and another statement calling preliminary ruling "bizaare."

It's a game of wait and see. The ITC final determination isn't until February at the latest, and I think there is room for the ruling to go either way. I would expect that the Delta legal team has a good sense of how this will go, and they also have time to prepare for contingencies.

It's time to hurry up and wait.

dtw2hyd wrote:

Boeing's next big fight will be with UTC ie., about Rockwell acquisition. So UTC should get into civil aviation.

Is there not anti-trust rules within the US explicitly forbidding airframers from building engines and visa-versa?

Lots of great comments and opinions on this forum....yet most people seem to be very short sighted with there memories and cant go back 20, 30, 40, 50-years.
Douglas Aircraft was in the 1940, and 50's owned 90% of the world commercial aviation market with the DC3, 4, 5, 6, 7...Boeing bet the farm on the 707 dash 100 when Douglas stated no one would buy a jet A/C... the 707 became the KC135, ect and the rest is history...
well, not so fast, Douglas merged with McDonnell A/C in 1969 or so, why??? because the DC10 bankrupted the company and they need money! wow maybe if the US government had given Douglas a load/hand out/ whatever you want to call it, they would be making commercial AC today, I worked there for 30-years and recall the number of studies we did to launch the DC10, the MD-11, a MD-11XX, a MD-12, ect. why this did not happen???? MONEY.....simple...
yet most of you don't get this...
Lockheed Martin use to build commercial AC, last one was the L1011, why don't they build them today??? money, and competition. Boeing launched the 747 and bet the company and changed the world. no help from the US government !!!!!
Airbus exist today only because of Government help (MONEY), and they put MDC, McDonnell Douglas Corp out of business, Lockheed Martin out of commercial A/C, ect.
Yet lets Canada and UK fund Bombardier with 4Billion dollars! (which would have gone broke) without the infusion of cash, which the commercial market would not give them!.
30-years from now we will have another Airbus and the market will be spite in 33%!!!!.
Boeing will only have 33% of the market then......
And you people wounder why Boeing is after the C100......
look at history, there is a reason Boeing is a 100 years old....
I use to call Boeing the Evil Empire when i worked at MDC, yet Airbus is why MDC was purchased by Boeing!...
make no dought Boeing bought MDC.....and now we have only two companies, and one of them is not in the US, yet the US was the world leader in aviation....
Thats why we still make 80% of all the parts for AC....
you guys are all short sighted, losing a few billion on F-18 sales, AC sales to delta airlines, ect. is worth 12% of the worlds commercial AC market....

...

racercoup wrote:

mjoelnir wrote:

BBD should just assemble the CS sold in the USA in Wichita, problem solved.

I don't think the Canadian government invested billions to bail out Bombardier to see the jets manufactured in the US

See, that's the thing; Investissement Québec gets 50 million class B shares exercisable at C$ 2.21 (Closing price of BBD on TSX on Jun 30 C$2.36). If C-Series is successful, they get back handsome returns for their investment by way of capital gains and dividends. This is unlike a tax subsidy which BA gets where the state and federal tax payers don't see a nickel returned.

There will be no problem from Investissement Québec other than some disgruntled union workers at BBD.

UK Government has its say

https://www.flightglobal.com/news/artic ... oe-442039/

Wes...

golfradio wrote:

racercoup wrote:

mjoelnir wrote:

BBD should just assemble the CS sold in the USA in Wichita, problem solved.

I don't think the Canadian government invested billions to bail out Bombardier to see the jets manufactured in the US

See, that's the thing; Investissement Québec gets 50 million class B shares exercisable at C$ 2.21 (Closing price of BBD on TSX on Jun 30 C$2.36). If C-Series is successful, they get back handsome returns for their investment by way of capital gains and dividends. This is unlike a tax subsidy which BA gets where the state and federal tax payers don't see a nickel returned.

There will be no problem from Investissement Québec other than some disgruntled union workers at BBD.

Not even close. Boeing received a break on state's business and occupation taxes for locating plants in their jurisdiction for an agreed on length of time. So the state (s) in question are not giving up anything, but are getting jobs. The wages tied to those jobs are then taxed so the state has income it otherwise would not have had in addition to happy citizens. The WTO ruled this year that this was NOT anti-trade.

Boeing is not questioning the Canadian government's investment in Bombardier but rather the fact that it sold the airframes well below the cost of manufacturing. This dumping is not good for Boeing or it's other clients such as Southwest. I'm sure Airbus is happy they took up the cause also.

I don't think Boeing is stupid at all for their actions, I do think Bombardier made a stupid move selling so low. Time will tell.

jalarner wrote:

If anyone can explain, there are a few things I don't quite understand:
1. How can they decide on a 300% (or future to be confirmed rate) on a per unit cost that is undecided (nothing delivered/invoiced yet)? If list is $80million, but sold for $20 (or $30), how does taxing it make it a fair transaction?
2. How did they decide the rate without knowing what the sold unit cost was. Eg., If sold for $20m 300% may be appropriate, but if sold for $30m then 200%, etc.
3. Building on above....if BBD and Delta revise they price to say $35m each, would the tariff still apply as this is now priced to market comparables?
4. Building on above again...does BBD charge a higher amount to make a 'fair payment', but offer service work they can charge to BBD for other jobs at a much lower rate to balance off long term?

1.) List price is irrelevant. It's an entirely fictional number. The actual calculation was in two parts for the two related cases against Bombardier, prohibited subsidies, and dumping:
(a) 220% was based on identifying each alleged subsidy received, using a finance formula to assign an effective value of the subsidy for each of the 10 years the subsidy is treated as affecting the market over. They then divide that number by the actual revenue for the affected projects for each year, and call that the subsidy ratio. Then they sum up the resulting percentages for each subsidy. The only year they used was 2016, when only 7 CSeries were delivered (and even then, the numbers they seem to have used appear low to me), so effectively, Commerce calculated the value of the subsidy as if the CSeries was never going to sell more than 70 frames. They also assigned the full value of the subsidies to the CSeries, even though some were split between CSeries, Global business jets, and I think other work.

(b) 80% was based on the degree to which Bombardier underpriced the sales compared to either sales in Canada or compared to the manufacturing cost. Boeing submitted a calculation they made claiming that 80% was the correct value. Bombardier did not respond with contrary information (I have a theory why), so Commerce accepted Boeing's claim at full value.

2.) As above, but I expect Bombardier will submit their own data before the final determination in the spring, in order to reduce the penalty rates. My theory is they're delaying doing so to try to fight the penalties entirely, before shifting to accepting the penalties but minimize their scale as a last resort.

3.) If the sales are upheld as having already taken place at contract signing, where as Bombardier contends the sales don't actually take place until delivery, then yes, the rates still apply. However, washingtonflyer has indicated that after the penalties have been in place for a year, Delta can petition for the dumping (80%) penalty to be reduced based on the more recent sales. The subsidy penalty would be unaffected by this.

4.) Washingtonflyer has continually discussed the penalty as being levied through the company importing the product - Delta. Based on his experience, I assume he knows what he is talking about. I assume if Bombardier tried to pay offsets for this to Delta, Boeing would allege that they are simply doubling-down on dumping.