Bombardier's CSeries and its aggressive sales tactics threaten the very existence of Boeing's 737 Max 7 and the US aerospace industry, Boeing's vice-chairman Ray Conner told US trade officials last week.
"The 100-150 seat market matters greatly to Boeing, and Bombardier is very close to forcing us out of this altogether," Conner said during a hearing held by the United States International Trade Commission on 18 May.
"It will only take one or two lost sales involving US customers before commercial viability of the Max 7, and therefore the US industry's very future, becomes very doubtful," Conner added, according to a hearing transcript obtained by FlightGlobal.
Conner and other representatives of Boeing, Bombardier and Delta Air Lines spoke at the hearing into whether Bombardier violated trade rules.
The US government launched the examination after Boeing filed a petition on 27 April claiming financial harm from Bombardier's subsidies and low sales prices.
Boeing alleges that Delta, which purchased 75 CS100s in 2016, paid about $20 million each for aircraft that cost Bombardier $33.2 million each to produce.
Bombardier was able to make the deal because it received $2.5 billion in government equity infusions and billions more in other subsidies, Boeing alleges.
The Canadian airframer's tactics have depressed prices for competing small narrowbody aircraft like 737-700s and 737 Max 7s, Boeing says, adding that pressure from Bombardier forced Boeing to cut the price of 737-700s it sold to United Airlines.
"The way they're pricing it is dumped beyond any reasonable imagination," Robert Novick, an attorney for Boeing, told the Trade Commission. "If Boeing cannot secure additional orders for the 737 Max 7, or is forced to sell at depressed prices, the programme will not succeed and Boeing will be eliminated from the 100 to 150 seat market."
Parallel investigations by the Trade Commission and the US Department of Commerce are scheduled to wrap up by November and could result in import duties, the Department of Commerce has said.
Representatives from Bombardier and Delta dismissed Boeing's claims, insisting the CSeries does not compete with larger 737s.
Bombardier developed CSeries to fill a need that arose after Boeing abandoned the roughly 100-seat market when it stopped making 717s a decade ago, they said.
Boeing's 737-700 and 737 Max 7 carry roughly 126 to 138 seats, while CS100s carry about 108 seats.
"Boeing doesn't even make a product that competes with the aircraft Bombardier offered," said Peter Lichtenbaum, an attorney representing Bombardier. "Aircraft are not like shampoo, where getting 30% more for a comparable price is a bonus."
Indeed, Conner confirmed that due to Delta's price requirements Boeing initially had discussed selling Delta used 717s or traded-in Embraer 190s.
"Boeing could not offer us a new airplane in the 100- to 110-seat space that met our needs in the timeframe that we needed to execute," Delta senior vice-president of supply chain management and fleet Gregory May said at the hearing. "It would be wrong to suggest that Boeing lost sales to Delta because we purchased the CS100. Boeing simply was not in the mix."
May also addressed pricing, saying airlines commonly get discounts in exchange for risks associated with being an initial customer of a new aircraft.
"Everyone in the industry understands that the first marquee… customer is being rewarded for being the first for fully evaluating the aircraft," May said.
Though Bombardier did not disclose prices paid by Delta, the airframer's vice-president of commercial operations Ross Mitchell dismissed the $20 million figure.
"The price that has been quoted is way off, and we'll leave it at that," he said.
Much of the hearing focused on seat count, with Boeing insisting the CS100 competes in the 100 to 150 seat segment, and Bombardier and Delta saying CSeries actually occupies a smaller, unique niche.
"A 100-seat plane and 150-seat plane are not interchangeable for Delta's purpose," said Delta vice-president of network planning in the Americas Joe Esposito.
Still, Conner and other Boeing representatives painted Bombardier's price cuts as threatening the "commercial momentum" of the 737 Max 7.
"The Boeing 737 Max 7 appears to be perilously close to, or maybe even already… locked into such a negative commercial momentum cycle," said Jerry Nickelsburg, a University of California Los Angeles economist who spoke on behalf of Boeing.
"It is already a precarious situation," Conner said.
Boeing has received orders for just 63 737 Max 7s from five customers, and has not received a significant order since 2013, Conner said.
"Bombardier has said it wants 50% of this market, which it will probably win at the prices it is offering. If Bombardier does that, we're looking at losing $330 million dollars in revenue every year," Conner says.