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Boeing, Bombardier and Delta spar ahead of CSeries tariff ruling

Boeing and Bombardier are both urging the US Department of Commerce to leave the pending Bombardier-Airbus partnership out of its CSeries import tariff decision.

Delta Air Lines, meanwhile, continues to insist its purchase order with Bombardier was not an actual sale due to the fluid nature of purchase agreements. It also notes in court papers that a planned US CSeries assembly sites means no aircraft will likely be imported from Canada.

"There has been no sale for import to date and, now, likely will never be," says Delta in a 13 November filing with the US Department of Commerce. "The absence of such a sale or any likelihood of the same requires that the department issue a negative final determination."

Purchase agreements can change substantially before deliveries, argues Delta, which itself has expressed willingness to delay CSeries deliveries until a US assembly site opens.

The filings do not make clear if Delta actually changed its agreement with Bombardier. Contract changes were redacted from legal papers and Delta was not immediately available for comment.

Bombardier and Airbus both argued in recent filings that their deal remains far from final and would occur outside the department's investigation timeframe.

The deal calls for Airbus to acquire 50.01% of the CSeries programme and for the companies to establish a Mobile, Alabama site to assemble aircraft for US customers like Delta Air Lines.

Such a move would enable US customers to avoid a potential 300% import duty that the Department of Commerce preliminarily imposed in recent months, Airbus and Bombardier executives have said.

In a 13 November legal filing, the Canadian manufacturer says the Bombardier-Airbus tie-up remains just a proposal and still requires regulatory approval. The companies have said the deal could close in the second half of 2018.

"It would therefore be premature for the department to base any decision on" the partnership, says Bombardier.

Instead, Bombardier argues that the Department of Commerce should evaluate future events via later "administrative reviews".

The pending 300% import tariff stems from an April petition filed by Boeing in which that company accused Bombardier of receiving unfair subsidies and then dumping CSeries jets to Delta Air Lines at artificially low prices in 2016, therefore hurting Boeing's sales of 737 Max 7s and 737-700s.

Final rulings are to be issued by the Department of Commerce on 18 December, but any tariff remains contingent on the US International Trade Commission determining that Boeing suffered harm.

The Trade Commission's rulings are scheduled for 1 February 2018, according to government documents.

Boeing likewise urges the Department of Commerce to leave the pending Bombardier-Airbus partnership out of its investigation.

"The proposed deal between Bombardier and Airbus has no bearing whatsoever on the department's current investigations," says Boeing in its 13 November legal filing. "Quite simply, there is no deal to evaluate at this time – only materials outlining a transaction."

But Boeing goes further, saying aircraft assembled in the USA would still be subject to import duties.

Boeing also suggests Bombardier and Airbus might drop their Alabama plans should the Department of Commerce not impose tariffs.

"The ambiguity around Bombardier's plans for Mobile should be no surprise. Assembly of the CSeries in the United States would be commercially irrational, except as an attempt to circumvent any anti-dumping duties," says Boeing in its filing. "In the absence of any duties, the announced plans to assemble the CSeries in the United States will never materialise."

Delta also blasts Boeing for suggesting that Bombardier and Airbus seek to evade or circumvent tariffs.

"In Boeing's view, any action would be a potential form of 'evasion'," says Delta in a 20 November filing. "Modify a purchase agreement – evasion. Look at options to acquire a 109-seat aircraft that the US industry does not currently produce – evasion. Support expansion of the US aerospace industry and competition in the service of customers – evasion."

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