News

Airbus wins Delta deal as the Boeing-Bombardier battle heats up

Delta Airlines signed a deal with Airbus for 100 A321 aircraft, with an option for 100 more, seeking to replace its aging fleet of MD90, Boeing 757 and Airbus A320 aircraft.

But things are not quite as simple as choosing one narrow body over another. It all started when Bombardier sold 125 CS300 jets to Delta – a deal that Boeing claims was done at a very low price due to unfair government subsidies.

As a result, the US Department of Commerce has proposed the imposition of 300% duty after finding that the aircraft were sold at unfair prices. This duty hurts Bombardier and Delta both. However, this duty rate will be thrown out unless the International Trade Commission sides with Boeing in the final hearings. The American aerospace giant, however, has their work cut out for them because they didn’t officially compete for Delta’s business. Since they were not competing for the business, they cannot claim to be hurt by the sale, claims Bombardier.

Boeing plans to argue in the final hearings that although they were not competing for Delta’s business, allowing the C-Series jets in without a duty penalty will open the doors for unfair competition from the Canadian company and will hurt opportunities in the American market.

The fallout of the Boeing-Bombardier deal is beyond just Delta buying A321 aircraft. The Canadian government has called off a deal to buy F18 Hornet aircraft from Boeing, effectively punishing them for starting this battle with Bombardier, which is based in Montreal. That is not to say that they’re not buying F18 Hornets – they’ve just decided to buy used ‘classic’ Hornets from Australia instead.

Adding complications is Airbus acquiring a stake in Bombardier and planning to assemble C-series jets in Alabama, skirting the issue of duties altogether. However, this needs federal government on all sides of the deal, which is yet to come through.

More about Delta’s New A321s

The A321s will start joining Delta’s fleet in 2020. They will be in a 197 seat layout, with 20 first class seats. The aircraft will be powered by Pratt & Whitney PW1100G geared turbofan engines. Delta operates a fleet which is dominated by Boeing but this is changing quickly – their 747-400s are due to be replaced by A350-900s. The 767-300ER will be replaced with A330-900neo and A350-900.

The airline’s move from being Boeing-dominated to being Airbus-dominated (specially if you consider Airbus and Bombardier aircraft together) is obviously cause for concern at Boeing.

Would you agree with Delta and Bombardier in this case or would you side with Boeing? Let us know what you think in the comments!

Based on and with information from reports and articles published on cbc.ca and skift.com as well as bloomberg.com

Leave a Reply

Your email address will not be published. Required fields are marked *