Bombardier rejects Boeing claim CSeries was dumped into the U.S. at below cost

Models of Bombardier C-series airplanes are shown at a news conference in Montreal, Que., Tuesday, Feb. 7, 2017. (Paul Chiasson / THE CANADIAN PRESS)

MONTREAL -- Bombardier and the federal government have rejected Boeing's claim in a complaint filed with the U.S. government that its Canadian rival has dumped its new CSeries commercial jet into the United States at below cost.

"Bombardier structures its commercial dealings to ensure compliance with the laws and regulations of the jurisdictions in which we operate, including those issues raised by Boeing," the Montreal-based aircraft manufacturer said in an emailed statement.

The world's third-largest airplane maker said it spends about US$3 billion annually with U.S. suppliers and employs about 7,000 people in dozens of facilities in both rail and aerospace across 17 states.

The Seattle-based competitor said Thursday that it petitioned the U.S. Department of Commerce and the U.S. International Trade Commission for investigations into subsidies and pricing of the CSeries.

It is also seeking an order to be issued against the sale of the plane in the important American market.

Economic Development Minister Navdeep Bains said the government objects to the allegations and vowed to mount "a vigorous defence."

"We are confident that our programs are consistent with Canada's international obligations," he said in a statement.

Boeing said it asking the Trump administration to act "to end Bombardier's illegal and unfair business practices before it is too late to prevent significant harm to America's aerospace industry and thousands of good-paying aerospace jobs."

The aerospace giant said the threat against its suppliers will only grow as Bombardier increases the annual production rate of the CSeries to between 90 and 120 airplanes by 2020.

It said more than US$3 billion in government subsidies so far have allowed Bombardier to engage in "predatory pricing" for an aircraft that competes directly against its 737-700 and 737 MAX 7 airplanes.

Boeing claimed Bombardier has sold CSeries planes that cost US$33 million to produce for less than US$20 million each and at prices below what it charged in Canada.

"It's selling the aircraft in the U.S. at prices that are millions lower than those that they're charging in Canada, which is the very definition of dumping," Boeing spokesman Daniel Curran said in an interview.

Boeing joins Brazil, which filed a similar complaint with the World Trade Organization at the urging of rival manufacturer Embraer.

Delta Air Lines will become the first U.S. CSeries carrier after placing a firm order a year ago for 75 CS100 aircraft valued at US$5.6 billion. It also has options for 50 more planes and can covert some of the aircraft to larger CS300s.

Air Canada followed by ordering 45 CS300s for US$3.8 billion at list prices, plus options for 30 more planes.

Airlines typically pay much less than list prices and early buyers of new planes usually get low prices.

The latest challenge against Bombardier's largest aircraft came just days after the U.S. imposed preliminary duties of up to 24 per cent on softwood lumber imported from Canada.

- with files from Peter Cameron in Toronto