A Week to Go Before a Preliminary Ruling in Boeing v. Bombardier - AirInsight
By Ernest S. Arvai
The first major milestone in the trade complaint that Boeing filed against Bombardier will occur a week from today, when a preliminary determination will be revealed. This will be an interesting test of the new administration and will certainly show whether logic or politics will prevail in international trade negotiations.
Boeing alleged two things in its claim – one, that its 737 aircraft program was threatened by the CSeries from Bombardier, and second, that Bombardier is selling the CSeries below its production cost into the market.
The facts of the matter, as many industry experts have pointed out, do not support Boeing's claims.
An excellent piece by Darryl Jenkins yesterday highlighted the hypocrisy of Boeing's actions. Canada's Prime Minister is ramping up his fight with Boeing, saying his government won't do business with a company that he's accusing of attacking Canadian industry and trying to put aerospace employees out of work.
Does CSeries really threaten the 737?
Let's look at some of the facts. First, the only US sale of the aircraft was to Delta, which was looking for a 100 seat aircraft. Boeing does not make an aircraft in this class, while Bombardier and Embraer offer the competing CS100 and E190 models, respectively. (Boeing offered Delta ex-Air Canada E190s, which they initially accepted and subsequently sold) Delta then chose the CS100, and received launch customer pricing, which is typical for a key customer in a vital market.
The smallest Boeing 737, the MAX7, was so poorly received in the market that Boeing added additional seats to make the re-engined model of a type that first entered service in 1967 more attractive to customers, and it still isn't selling well. This is despite the fact that the 737 is the best selling commercial aircraft of all time, and that its larger (and more economic) models have thousands of orders in backlog and are sold out for about 7 years. The 737 is Boeing's cash cow, and apart from the smallest model, is doing quite well, thank you.
Why doesn't the smallest 737 sell very well? Because it is a shrink of a larger design. By shrinking the baseline MAX8, the MAX7 has the wing, structural reinforcement, and heavier engines of the larger model, making it heavier and less efficient than smaller competitors.
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