Boeing vs. Bombardier: The fight continues

MONTREAL — The U.S. International Trade Commission voted unanimously Friday for the government to continue its investigation into allegations by Boeing that Bombardier’s CSeries jets are being unfairly subsidized.

The commission said there is a “reasonable indication” that a U.S. industry is threatened with “material injury” due to the aircraft allegedly being sold in the United States at less than fair value.

As a result of the decision, the U.S. Department of Commerce will continue its investigation and disclose its preliminary countervailing duty determination around July 21 and anti-dumping duty decision around Oct. 4.

Chicago-based Boeing petitioned the U.S. Commerce Department and the U.S. International Trade Commission earlier this year alleging subsidies given to Bombardier have allowed the Montreal aircraft manufacturer to sell the CSeries planes at well below cost.

Canadian Defence Minister Harjit Sajjan has said Boeing is not behaving like a “trusted partner” and the government wants the company to withdraw the complaint.

Ottawa has also issued a thinly veiled retaliation threat to scrap the planned purchase of 18 Super Hornet fighter jets from the Boeing.

Boeing spokesman Dan Curran said the aerospace giant values Canada as a customer and partner for its commercial and defence businesses.

“It’s a relationship that has existed since 1919 and that will continue to thrive long after this commercial trade matter is resolved,” he wrote in an email.

“Global trade only works if everyone plays by the same rules of the road, and that’s a principle that ultimately creates the greatest value for Canada, the United States, and our aerospace industry.”

Bombardier has rejected the accusations and argued that their CSeries planes never competed with Boeing in a key sale to Delta Airlines.

“Today’s preliminary decision was expected given the very low bar for Boeing in this first step of the process,” spokesman Simon Letendre wrote in an email.

“Going forward, we are confident that a detailed review and analysis of the facts will demonstrate that Boeing’s claim is without merit.”

Last year, the Quebec government invested US$1 billion in exchange for a 49.5 per cent stake in the CSeries. Bombardier also shored up its finances by selling a 30 per cent stake in its railway division to pension fund manager Caisse de depot for US$1.5 billion.

Meanwhile, Ottawa provided a $372.5-million loan earlier this year to help support Bombardier’s CSeries and Global 7000 aircraft programs. That’s on top of about $1 billion received in 2008 from Ottawa, Quebec and Britain to develop the CSeries.

On the Toronto Stock Exchange, Bombardier’s shares fell more than five per cent, losing 13 cents at $2.42 in afternoon trading.