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In pursuing trade case, Boeing is willing to risk defense orders

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Even in the sometimes illogical world of trade law, Boeing’s complaint against Canada’s Bombardier is quirky. (www.stltoday.com) Mehr...

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canuck44
canuck44 1
As has been discussed on this forum previously the F/A 18 contract is a small price for Boeing, but loss of all defense contracts will add up. The article delineates two of the Canadian government contemplated pricey purchases, but Boeing produces drones and other battlefield equipment at considerable price for which they will be shut out.

The Quebec government bought 49% of the Bombardier stock which does not effect price any more than had they bought Boeing stock. The Canadian government extended loans which must be repaid by Bombardier. This does not make for a strong case for Boeing especially since they have no product to compete with the C-100. They have to hope for a political "Ninth Circuit" type decision to sustain their complaint.

If all that fails, the Canadian government can and will retaliate as they are essentially investors in this product. This can range from duties on finished products such as the purchases by Air Canada and WestJet to export tariffs on component parts for Boeing manufacturing in Canada. They Boeing will be in full whine complaining of a problem of their own making.

This whole mess would go away (and might yet if the Commerce Department sides with Boeing) if Delta puts its remaining Boeing orders on hold sending a message to the Boeing boardroom that cannot be ignored.
RRKen
Kenneth Schmidt 1
I think that Bombardier will prevail since as you said, Boeing does not produce a product to compete with the CS-100, and thus, has no case.

However Delta merely putting it's orders on hold will not get the attention of Boeing's Board if instead Delta were to cancel the orders outright.
bentwing60
bentwing60 1
This all misses the historical perspective that EADS was backed by government money on all fronts on the A380, and who knows what else, but, on the 380, even the AB consigliere now admits will never be recouped. Or repaid, I suspect. Concorde anyone? The fact remains that subsidies may take many forms. To argue that Canada will never forgive these loans is a presumption Boeing is unwilling to take. Not that Boeing hasn't had a subsidy or "who knows", over the years, but they didn't wind up the # 1 commercial airframer still in existence in the USA because of their dumb lawyers. And don't kid yourself, any time 49% of a major manufacturing companies stock moves at one fell swoop, it affects the stock price and thus the underlying value of said entity. Gotta still be around to sell airplanes. And if Trudeau and company have painted themselves into a "retaliatory" strategy based on being "essentially investors in this product" where do you draw the line between a government subsidy and an investment. Division, the not so new norm.
canuck44
canuck44 1
This type of block investment dilutes the value of the individual stock but not the cost of the product if new shares or a new class of shares are issued as was the case of Bombardier. If in fact the shares had already been issued and held by the corporation then there would be no dilution.

The loans are another matter and there was likely to be some current or future asset pledged to at least provide political cover for the feds and most likely on a reverse sliding scale. The interest rate would also be a factor.
n914wa
Mike Boote 1
"By the time the case wraps up early next year, the U.S. could impose punitive duties that more than double the planes’ price. That might make Delta Air Lines, which has ordered 75 Bombardier CS100s with deliveries beginning next spring, rethink its commitment to the aircraft."

OR, it could make Delta rethink its commitment to Boeing.

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