At a hearing Tuesday with the U.S. International Trade Commission (ITC), Boeing Co. (NYSE: BA) and Canada’s Bombardier made their by-now familiar arguments related to the sale of 75 single-aisle planes to Delta Air Lines Inc. (NYSE: DAL) by Bombardier in April 2016. This so-called harm hearing will result in a decision by next week over a 300% tariff levied by the U.S. Department of Commerce on the sale of Bombardier’s planes to U.S. airlines.
Should the ITC’s decision favor Bombardier, the case evaporates, as does the tariff. If Boeing wins, the Commerce Department’s ruling stands.
Since the Commerce Department’s ruling in September, Bombardier has sold its C-Series project to European aircraft maker Airbus, which has promised to build a final assembly line for the aircraft in the United States. Delta said at the hearing that it is renegotiating its deal with Bombardier to require that any planes it receives are assembled only at the new line that would be built at Airbus’s Mobile, Alabama, location.
At the hearing, Boeing called the Mobile plant a feint and said that a new plant does not make economic sense and that a production line for the CS-Series would never be built. Further, if the ITC should accept Bombardier’s argument, then the Canadian company should be charged with circumventing U.S. regulations.
Bombardier noted that the CS-100 passenger jets sold to Delta already include 52% U.S.-made parts and that the percentage would rise when the plant is up and running. Final assembly of the plane probably adds only about 5% to the final value of the aircraft, according to Boeing’s labor union, basing its estimate on the cost of labor to assemble the 787 and the 777X.
A final decision is due in late January when the ITC votes on the appeal. The agency will issue a determination in early February.
Boeing’s shares closed up about 0.4% Tuesday to $297.25, after posting a new 52-week high of $297.58. Shares traded up about 0.5% at $298.75 in Wednesday’s premarket session.
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