Bombardier’s bad week ends with expectation of more tariffs and a WTO probe into CSeries

MONTREAL—Bombardier Inc. says it won’t be shocked if it gets hit next week with another large duty on its CSeries commercial jet.

The Montreal-based aerospace company says it is prepared for an “absurd” anti-dumping tariff after the U.S. Department of Commerce surprised the company Tuesday by levying a nearly 220 per cent countervailing duty.

The U.S. government is scheduled to announce its preliminary anti-dumping decision on Boeing’s petition next Wednesday.

Colin Bole, Bombardier’s sales chief for commercial aircraft, says the exorbitant levies make no sense and the company is confident they will be reversed in final decisions later this year.

Air Canada CEO Calin Rovinescu lent his support to the company, telling the Montreal Board of Trade that he found the ruling “troubling” because its effect on stifling innovation and competitiveness.

Canada’s largest airline has ordered 45 CSeries aircraft with options for 30 more that will allow it to fly to new destinations after deliveries begin in 2019.

With potentially more duties from the U.S. government looming on the horizon, the World Trade Organization announced Friday it has formally established a panel to review CSeries subsidies.

The establishment of a dispute settlement panel comes a month after consultations with Canada failed to resolve Brazil’s complaint that government subsidies for the aircraft are inconsistent with Canada’s WTO obligations.

No panel members have yet been appointed in what could be a lengthy process.

Brazilian rival Embraer said the WTO panel will examine more than US$3 billion in subsidies received from the governments of Canada and Quebec.

“We believe that the decision of the (U.S) Commerce Department reinforces the Brazilian government’s claim in the panel opened today at the WTO,” Embraer CEO Paulo Cesar Silva said in a news release.

He said the Canadian government subsidies have allowed Bombardier to sell the CSeries at artificially low prices, that distort the global market and harm competitors.

Bombardier said in August that it was disappointed by Brazil’s request, and that the investments and contribution programs in question comply with all WTO and international trade rules.

While the Canadian company is under seige from both the U.S. and Brazil, it says its sales campaigns aren’t being harmed and the company still expects to land some new orders later this year.

A Sept. 29 announcement by the company’s Commecial Aircraft division reflects that optimistic forecast.

Bombardier has concluded a firm purchase agreement with SpiceJet Ltd. of Gurgaon, India for up to 50 Q400 turboprop airliners.

The order, valued at up to US$1.7 billion, is the result of a handshake agreement between Bombardier and SpiceJet at the International Paris Air Show back in June. At that time, Bombardier signed a letter of intent to provide SpiceJet with 25 Q400 turboprops and purchase rights on an additional 25 aircraft, and that sale is now official.

Bombardier says this is the largest single order ever for the Q400, and it comes at a good time.

With Bombardier’s future in the U.S. market in question, the company is looking for other opportunities.

Shortly after the U.S. Commerce Department announced its hefty duty against the company, Bombardier said it plans to double down on its efforts to sell its CSeries in China.

The completion of the sale of Q400s in India could be a sign of future promise for the Canadian firm in Asian markets.

Bombardier says its Q Series turboprops and CRJ Series regional jets have made significant advances in the Australasia region where approximately 380 aircraft—including more than 240 Q Series turboprops—are in service with or on order by over 45 customers and operators.

Since 2010, SpiceJet has taken delivery of 15 new Q400 aircraft, but this contract for 50 planes represents a big step forward in the relationship between it and Bombardier.

The airline currently operates 20 Q400 aircraft in a 78-seat configuration, but the turboprops set to be delivered will boast a new 90-seat configuration. Bombardier says this sale will make SpiceJet the first airline in the world to operate 90-seat turboprops, pending certification by regulatory authorities.

“We have been witnessing growth in the number of passengers per departure in the turboprop market, and especially in India. Today, Bombardier offers the largest turboprop aircraft available on the market and SpiceJet will be the first airline to take advantage of the profitable and efficient operations that the 90-passenger high-density Q400 will offer them,” said François Cognard, VP of Sales, Bombardier Commercial Aircraft, South-Asia and Australasia.

“I am pleased to confirm SpiceJet’s latest order for up to 50 Bombardier Q400 planes, which has been announced at the Paris Air Show. I am sure this fresh order will help us further enhance connectivity to smaller towns and cities and help realize Prime Minister Narendra Modi’s vision of ensuring that every Indian can fly,” said Ajay Singh, chairman and managing director, SpiceJet.

Including SpiceJet’s order, Bombardier has recorded firm orders for a total of 610 Q400 aircraft.

The Q400 is currently made in Toronto, but Bombardier announced earlier this month it would move wing and cockpit production to a lower cost region.