Delta Awaits Bombardier Jets Made in the U.S. -- WSJ
October 19 2017 - 3:02AM
Dow Jones News
By Susan Carey in Atlanta and Doug Cameron in Chicago
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 19, 2017).
Delta Air Lines Inc. said Wednesday that it intends to take new
Bombardier Inc. jetliners built at an Airbus SE facility in
Alabama, though it didn't provide a timeline for the first
delivery.
Bombardier and Airbus this week announced a planned joint
venture that would include building some CSeries jets at the
European company's plant in Mobile, Ala., in an effort to avoid
proposed tariffs levied by U.S. trade officials on the Canadian
plane maker.
Delta was due to receive the first of its 75 CSeries jets next
spring, and last week Chief Executive Ed Bastian said they could be
delayed because of the trade spat between the U.S. and Canada over
Bombardier.
Mr. Bastian didn't provide further guidance on timing at an
event on Wednesday. Delta is prepared to wait as long as two years
for the jets to ensure they are assembled in Mobile and don't
attract tariffs, according to people involved in the
negotiations.
Airbus builds four of its A320 model jets a month at the Mobile
facility, which opened in 2015.
Local officials said they were unaware of the plan to build
Bombardier jets there until just before this week's
announcement.
Troy Wayman, vice president for economic development at the
Mobile Chamber of Commerce, said Airbus would likely have to
construct a new facility at the site to assemble the CSeries.
Mr. Wayman said officials could likely agree on a package of
incentives for Airbus in less than six months.
Airbus and Bombardier don't expect to complete their planned
deal until the second half of next year, and people involved in the
talks said it could take more than a year to construct facilities
to assemble CSeries jets in Mobile.
Mr. Bastian said it isn't clear when the Airbus-Bombardier pact
would secure regulatory approval or how long it would take to
establish a new assembly line in Mobile.
A final decision on whether to expand the Mobile plant hinges on
the outcome of the probe by U.S. trade officials. They have
proposed tariffs that would potentially quadruple the price of
CSeries planes for U.S. buyers after upholding a complaint from
Boeing Co. that the Canadian aircraft maker benefited from unfair
government subsidies.
A U.S. trade panel is due to rule in February on whether Boeing
suffered any harm. The tariffs would kick in if harm is found.
Boeing said that even CSeries jets assembled in Mobile would be
subject to tariffs on imported parts. Bombardier and Delta both
reject that argument.
"Boeing can make its own decisions," Mr. Bastian said. But it is
"hard to see how Boeing is harmed" when it doesn't have a plane in
the 100- to 150-seat category.
He said Delta had no role in the planned joint venture between
Airbus and Bombardier, which started with talks between executives
from the two plane makers at the Paris Air Show in June, according
to people involved in the discussions.
"We have a great relationship with Boeing," Mr. Bastian said,
adding that the trade spat wouldn't prevent Delta from buying more
jets from the U.S. aerospace company.
Delta is studying Airbus and Boeing jetliners to replace older
models from both plane makers. Mr. Bastian expects a decision over
the next six to 12 months.
He said both the Airbus A320neo family and the Boeing 737 Max
products are strong. He declined to say how many planes will be
ordered.
Mr. Bastian said the CSeries jets will help Delta bring some
flights now operated by commuter airline partners in-house, and
build up routes from its smaller hubs, including New York's La
Guardia Airport.
He said Delta wasn't a party to the Airbus-Bombardier deal
reached earlier this week, and said he expects a full briefing by
the parties in the coming days.
Write to Susan Carey at susan.carey@wsj.com and Doug Cameron at
doug.cameron@wsj.com
(END) Dow Jones Newswires
October 19, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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