Delta CEO: We will not pay the 300% tariff on new Bombardier C Series jets (DAL)

pulse

October 11, 2017 5:21 PM

Delta Air Lines CEO Ed Bastian said he would not pay the proposed 300% tariff on his airline's fleet of new Canadian-built Bombardier jets.

Delta Air Lines says it will not pay the proposed tariffs on its order of next-generation Bombardier C Series airliners.

"We believe we will get the planes at our agreed contract price," Delta CEO Ed Bastian told reporters and analysts during the airline's earnings call on Wednesday.

Bastian said his airline still fully intended to take the delivery of the Canadian-built airliners, adding that he was prepared to delay the delivery of its first CS100 jet, set for early 2018, to sort out the deal.

On September 26, the US Department of Commerce's International Trade Administration called for a tariff of 219.63% on Bombardier's C Series jet. A week later, the ITA called for another 79.82% tariff.

As a result, Delta and Bombardier now face a possible 299.45% tariff on each of the 75 Bombardier C Series aircraft Delta ordered in 2016. The Department of Commerce is expected to make a final decision on the matter in December.

Earlier this year, Boeing filed a complaint with the federal government claiming that its business was harmed by Bombardier using Canadian government subsidies to give Delta a price substantially below the cost of building the planes.

Delta and Bombardier have both pushed back on this claim, arguing that Bombardier's planes do not compete with any Boeing products. Bastian has noted several times that Boeing stopped producing the 717-200, a 100-to-150-seat jet comparable to the C Series, more than a decade ago. Delta is the world's largest operator of the 717.

Further, Delta also said Boeing's only proposed alternative to the C Series was a batch of secondhand Brazilian Embraer E190 regional jets taken as a trade-in from Air Canada.

pulse