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"Delta Vows Not to Pay U.S. Duties on Bombardier's C Series Jets"
Posted by: Steve G.
Date: October 11, 2017 02:32PM
Delta squares off against Trump? This will be interesting.

Delta Vows Not to Pay U.S. Duties on Bombardier's C Series Jets
By Michael Sasso
and Frederic Tomesco
October 11, 2017, 12:50 PM EDT October 11, 2017,
[www.bloomberg.com]
Delta Air Lines Inc. pledged not to pay import duties on Bombardier Inc.’s marquee jetliner, which was socked in the last two weeks with 300 percent tariffs by the U.S. Commerce Department.

It’s possible Delta will delay deliveries of the C Series planes, which are scheduled to begin next year, Chief Executive Officer Ed Bastian said Wednesday. The airline is also considering “various other plans” if the preliminary duties are finalized, he said without elaborating. Delta last year agreed to buy at least 75 of the jets at a list price of more than $5 billion. “We will not pay those tariffs, and that is very clear,” Bastian said on a conference call after reporting third-quarter results. “We intend to take the aircraft.”

Delta’s determination not to pay the import charges raised the stakes in a dispute pitting Montreal-based Bombardier against Boeing Co., which accused its Canadian rival of selling the C Series at “absurdly low prices.” Boeing won support from President Donald Trump’s administration, which ruled that Bombardier sold the planes at less than their fair market value after benefiting from government subsidies in Canada.

Bombardier jumped 5.9 percent to C$2.33 at 2:34 p.m. in Toronto after advancing as much as 6.8 percent for the biggest intraday gain in almost two weeks. Delta advanced less than 1 percent to $53.02.
Diplomatic Tensions

The trade spat has soured diplomatic relations between the U.S. and Canada, with Canadian Prime Minister Justin Trudeau warning that his government won’t buy new military jets from Boeing unless the Chicago-based planemaker drops the case. Trudeau met with Trump met in Washington on Wednesday amid discussions on reworking the North American Free Trade Agreement. The U.S. Commerce Department ruling has also drawn fire from British Prime Minister Theresa May, who lobbied Trump on behalf of Bombardier and the more than 4,000 people it employs at facilities in Northern Ireland.

The U.S. tariffs, which consist of 220 percent countervailing duties and 80 percent anti-dumping restrictions, could be reversed by the U.S. International Trade Commission if it concludes that Boeing wasn’t injured by Bombardier’s jet program. That decision is expected to be made next year. The Commerce Department also still needs to issue a final ruling in both cases. The argument that Boeing was harmed by the C Series is “unrealistic, a bit nonsensical,” Bastian said on the conference call. He said Boeing competed against Bombardier by offering Delta used Embraer E190 planes.
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