Boeing seeks talks with Canada over threat to scrap jet purchase

Ivan Schwartz
May 22, 2017

"However, Boeing military sales division is concerned and is seeking to communicate with Canadian government decision-makers to mitigate the possible impact to their Super Hornet sale".

Boeing convinced the U.S. Commerce Department and International Trade Commission this week to launch an investigation into much-subsidized Montreal-based Bombardier Inc. for "dumping" commercial airplanes into the U.S. market - a dispute overshadowed by an impending renegotiation of the North American Free Trade Agreement.

Canada unveiled plans to buy the Super Hornets last November as a stop-gap measure while it prepared an open five-year competition to replace its ageing fleet of 77 Boeing CF-18 fighter jets.

But he also said, based on the amount of money Boeing stands to lose from the Super Hornet purchase, the USA company would back down. In the meantime, he has talked about buying the Super Hornet in smaller quantities than envisioned for the F-35 replacement.

Canada's ambassador to the USA says he was only given an hour's notice by Boeing that it was about to challenge Bombardier under American anti-dumping rules, calling it lousy customer relations for a company hoping the government will buy its aircraft.

"Canada is reviewing current military procurement that relates to Boeing", Canadian Foreign Minister Chrystia Freeland said in a statement released late on Thursday.

Curran said "substantial government subsidies have enabled Bombardier's predatory pricing" in the U.S. In February, the federal government extended a $372.5 million interest-free loan to the company, and a year ago, for a 49.5-per-cent share, Quebec offered a US$1 billion investment in the CSeries jets with which Boeing takes issue.

Boeing seeks talks with Canada over threat to scrap jet purchase

According to various military experts, Freeland was most likely talking about the 18 Super Hornets purchase, a deal that could be worth up to $2 billion.

But she added that Canada will "be very strong and very firm in defending Canadian companies, and above all, in defending Canadian workers ..."

Boeing Co. on Friday rushed to fix a gamble that looks to have gone wrong, with the defense unit of the USA aerospace giant seeking to fend off a Canadian threat to scrap the purchase of 18 St. Louis-made Super Hornet jets, a source familiar with the matter told Reuters.

Lobbyists, lawyers and aerospace executives crowded a room in Washington for a little battle playing out in the broader context of the day's larger trade news: the USA announcement that NAFTA renegotiations will start in the next 90 days.

Boeing vice-president Raymond Conner told the hearing in D.C. that Bombardier's recent deal with Delta Air Lines for 125 CSeries helped build momentum for its Canadian rival. The U.S. commerce department and the global trade commission agreed with Boeing. A preliminary determination on the petition is expected by June 12. Final determinations are scheduled for October and December.

Boeing spokesman Dan Curran is well aware of the government largesse that Bombardier enjoys, suggesting in a statement that "substantial government subsidies have enabled Bombardier's predatory pricing" in the American marketplace. "Boeing doesn't even make a product that competes with the aircraft Bombardier offered in the sales campaigns that Boeing complains about", lawyer Peter Lichtenbaum told the trade commission.

The Quebec government invested $1 billion in exchange for a 49.5 percent stake in the C Series previous year.

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