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Delta, Bombardier renegotiating delivery clause in CS100 deal

Delta Air Lines has asked Bombardier to guarantee all 75 CS100s ordered in April 2016 will be assembled in Mobile, Alabama, instead of Canada, a top airline executive says.

The request puts further pressure on Bombardier’s plan to open a second final assembly line in Mobile after consummating a deal with Airbus to take a majority ownership stake in the CSeries programme.

Negotiations between Delta and Bombardier remain ongoing and could conclude as early as January, Bombardier officials said in testimony at a US International Trade Commission hearing on 18 December.

Delta does not have rights under the existing contract to refuse delivery of CS100s from Mirabel, but that part of the agreement has been reopened in ongoing talks with Bombardier, says Greg May, Delta’s senior vice-president of supply chain management and fleet.

The Delta order for 75 CS100s in April 2016 was part of a package of three orders that forced Bombardier to report a $500 million loss.

That transaction prompted Boeing to accuse Bombardier of illegally dumping the CS100s in the US market and to file a trade case with the Commerce Department earlier this year.

A preliminary ruling in September determined that the CS100s could be faced with a tariff up to 299% of the value of the contract, pending the outcome of the ITC’s deliberations in January or February.

In the meantime, the proposed tariff pushed Bombardier to seek financial help by agreeing to partner with Airbus, which will take a majority ownership in the CSeries programme pending anti-trust reviews in 2018. The agreement with Airbus opens the door for Bombardier to open a $300 million final assembly line in Mobile.

Delta originally planned to take delivery of CS100s from next year, but is willing to wait as long as it takes to receive the aircraft from the new plant in Alabama, May says. Bombardier needs at least two years after the Airbus agreement is finalised to open the new Mobile plant and begin making deliveries.

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