Delta CEO Ed Bastian has come out swinging, saying Delta will take delivery of its new Bombardier C Series order while also promising it will never pay the 300% tariff levied by the U.S. Government.
I outlined the stakes of the battle here. In a nutshell, Boeing lodged a “dumping” complaint against Bombardier because Bombardier’s Canadian-made C Series aircraft are heavily subsidized and were also sold to Delta so cheap the order will likely not even recoup production costs. Bombardier contends that Boeing does not compete with the C 100 aircraft it sold to Delta, therefore Boeing was not hurt. Last month, the U.S. government sided with Boeing in a preliminary ruling, slapping a 300% tariff on all C Series aircraft imported to the USA.
Speaking on third quarter earnings conference call this week. Bastian addressed the controversial issue–
We will not pay those tariffs…And that is very clear…We intend to take the aircraft. I can’t tell you how it’s going to eventually work out. There may be a delay in us taking the aircraft as we work through the issues with Bombardier, who is being a great partner in this. We think that the aircraft needs to come to market, we believe it will come to market, and we believe Delta will get it at the agreed contractual price. We’re not going to be forced to pay tariffs or do anything of the ilk.
Boeing competed very hard for the order, except they were competing with not their own product, but it was a Brazilian product, an Embraer product, that wasn’t even new. It was used. So as you look through this, and try to see how exactly a harm case is going to be developed, particularly to justify the type of tariffs that are being contemplated, to us it’s unrealistic. A bit nonsensical.
I’m usually hard on Delta, but I’m right behind CEO Ed Bastian here. Boeing will be unable to show any direct harm and therefore should not prevail in this. The 300% tariff is a political charade that will likely be quietly dismantled.