Delta Will Take Bombardier Jets--Update
October 11 2017 - 11:37AM
Dow Jones News
By Doug Cameron
Delta Air Lines Inc. said it doesn't expect to pay any of the
tariffs proposed by U.S. trade officials on new Canadian jetliners
and still plans to take delivery of the Bombardier Inc. planes.
U.S. trade officials have outlined plans for tariffs that would
potentially quadruple the price of the CSeries planes after
upholding a complaint from Boeing Co. that Bombardier benefited
from unfair government subsidies. The move has fueled a trade spat
between the U.S. and Canada that has also embroiled the U.K., home
to a big Bombardier plant.
Delta Chief Executive Ed Bastian said he didn't expect any
tariffs to be imposed, claiming Boeing's case was weak. He said on
an earnings call that initial deliveries from its 75-plane order
slated for next spring could be delayed as it works through the
issues with Bombardier, but the airline still expects to pay the
contractual price.
The airline has called for the case to be dropped, arguing that
Boeing wasn't harmed as it didn't offer a competing jet. A U.S
trade panel is due to rule next February on whether Boeing suffered
any harm, which if it does would trigger the proposed tariffs.
Mr. Bastian's comments came as Delta reported
better-than-expected quarterly profits and said the revenue
environment was improving even after hurricanes disrupted its
network.
The Atlanta-based airline opened the reporting season for what
is traditionally the industry's busiest and most profitable
quarter, but one that this year has been hit by multiple weather
disruptions and an outbreak of fare wars that are expected to
depress earnings.
Delta said profits dipped to $1.18 billion in the quarter to
Sept. 30 from $1.26 billion a year earlier but forecast its keenly
watched average passenger revenue would rise by 2% to 4% in the
fourth quarter. Earnings per share slipped to $1.64 from $1.69, but
the $1.57 adjusted figure was ahead of the $1.54 consensus among
analysts polled by Thomson Reuters.
U.S. airline shares fell sharply during the summer as efforts to
boost fares and profits faltered because of intensifying
competition on some of the busiest domestic routes from ultra
low-cost carriers such as Spirit Airlines Inc.
Delta's average passenger revenue climbed 3.6% in the quarter
compared with a year earlier, a positive trajectory that is
expected to continue through the end of the year.
American and United Continental Holdings Inc. this week raised
their own guidance for average passenger revenue for the third
quarter, sparking a rally in airline stocks.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
October 11, 2017 11:22 ET (15:22 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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