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DUBAI: Tariffs won't apply to US-assembled CSeries – Cromer

Bombardier intends to start building a $300 million aircraft factory in Alabama immediately after the CSeries joint venture's sale to Airbus closes – and CS100s delivered to US customers from that facility will not be subject to a possible import tariff, predicts the president of the Canadian airframer's commercial aircraft unit, Fred Cromer.

His comments directly challenge Boeing’s firm stance that all CS100s acquired by Delta Air Lines under a 2016 contract should be subject to any tariff imposed by the US Department of Commerce, regardless of where the aircraft are assembled.

"We're pretty confident that airplanes that are produced in the US with the amount of US content that's already on the aircraft will give us access to the US market without the tariffs," Cromer told FlightGlobal in an exclusive interview at the Dubai air show today.

In a thinly veiled jab at Boeing's globally distributed supply chain for aircraft such as the 787, Cromer notes that more than half of a US-assembled CSeries will come from US sources.

"I would challenge other aircraft programmes, even some of those built in the US, to demonstrate that they have that much US presence," Cromer says.

The dispute stems from a complaint that Boeing filed with the Department of Commerce last May over the CSeries sale to Delta. Boeing alleged that the CSeries had received unfair subsidies from the Canadian and UK governments, so the aircraft should be subject to tariffs as high as 160%. In a preliminary decision, the Department of Commerce proposed a 300% tariff instead. A final ruling – including a judgment on whether Boeing was harmed by subsidies – will come in the spring.

Meanwhile, Airbus in early October reached an agreement to acquire a majority stake in the Bombardier-Investissement Quebec joint venture in a cashless transaction. The acquisition, which is pending anti-trust reviews, throws Airbus's salesforce, services network and supplier contacts behind the CSeries.

Though now a minority owner, Bombardier expects the acquisition by Airbus to breathe new life in the CSeries sales effort, creating an opportunity to open a second assembly line in Mobile, Alabama, where Airbus assembles the A320neo.

The acquisition agreement with Airbus requires Bombardier to fund the $300 million construction project, Cromer says. That investment, which could be offset by state-funded incentives for manufacturers, can be financed without the need for Bombardier to raise more money, he indicates.

Although the construction project could take up to two years, Delta is willing to wait for the CS100 despite the delay, adds Cromer.

"Delta's told us that they are committed to the airplane, they're a committed partner, they're not happy with the actions that Boeing's taken and that really won't change their view on the aircraft – even if they have to wait," Cromer says.

For all the coverage from the Dubai air show visit our dedicated event page

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