Delta Air Lines CEO Ed Bastian defiantly announced today that the airline refuses to pay the proposed tariff of almost 300% on the Bombardier’s CSeries jets that the airline has on order.

Late in September, the U.S. Department of Commerce imposed almost a 220% tax on CSeries aircraft imports, after Boeing filed a complaint against Canadian manufactuer Bombardier alleging that the company had received illegal Canadian governemnt subsidies that gave it an advantage in sales. Just a few weeks ago, the United States International Trade Agency announced that it will be imposing an additional 80% tax on the aircraft.

“We will not pay those tariffs,” Bastian announced during a conference call.

The airline has various alternate plans if these tariffs are finalized, but none were explained by the CEO. Bastian said that the airline intends to get the aircraft one or another, however its delivery may be delayed due to the tariff fight. Last year, Delta purchased 75 Bombardier CS100 jets for about $5bn USD at list prices.

Bombardier and Boeing have been in a widely publicized fight over these tariffs, with Canadian Prime Minister Justin Trudeau stating last month that Canada could stop doing business with Boeing if the company continues to sue Bombardier. UK Prime Minister Theresa May has also stepped into the fight, saying that the current dispute has the potential to disrupt peace in Northern Ireland. Bombardier is one of the largest employers in Northern Ireland, with over 4,000 workers in Belfast, the capital.

Bastian and Bombardier have pushed back on these claims, saying that current Boeing aircraft are incomparable to the CSeries. Bastian has constantly noted that the American manufacturer has stopped producing the Boeing 717, the only 100-to-150 seat Boeing jet that could be comparable to a Bombardier CSeries jet. Currently, Boeing’s smallest offering is the Boeing 737-700, which carries up to 149 passengers, however Delta only operates 10 of these and does not have any plans to order more.

Should the U.S. International Trade Commission find that Bombardier did not harm business for Boeing, this tariff could be rescinded as early as next year.

Featured image by Bombardier.

Categories: Industry Talk