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The Boeing/Bombardier Commerce Department Ruling: Why It's Happening And What's The Latest News

The Boeing/Bombardier Commerce Department Ruling: Why It's Happening And What's The Latest News

Monday is shaping up to become a very important day for the aerospace sector as a trade dispute between industry titan Boeing Co (NYSE: BA) and Canada-based Bombardier Inc (OTC: BDRBF) could be settled.

A U.S. Department of Commerce preliminary ruling is expected to come early next week to settle a dispute in which Boeing believes Bombardier's C Series jet gained access to the U.S. market with the help of unfair government subsidies.

A ruling from the Commerce Department's Enforcement and Compliance division will be issued next month to determine if Bombardier's sale to Delta Air Lines, Inc. (NYSE: DAL) constitutes "dumping," Credit Suisse's Robert Spingarn commented in a research report. On top of that, a final determination in the case will be issued in February of next year which will likely decide the "extent of the injury to Boeing."

However, it is difficult to understand Boeing's position in the issue since it did not compete against Bombardier for the contract to supply Delta with planes, Spingarn noted. Delta was after all in the market for a smaller aircraft so much of Boeing's claims "rests on hypothetical future injury" if Bombardier looks to stretch out the C Series beyond 150-seats and create a true competitor to Boeing's 737. On the other hand, Boeing could one day decide to re-enter the 130-seat plane market which it exited in 2006.


"Either of these future scenarios are possible, and the former is even likely, though we fail to see how this hypothetical future could factor into a decision that centers around a very specific deal — the Delta sale — for which Boeing did not compete," the analyst concluded.

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Latest Ratings for BA

Jul 2020RBC CapitalMaintainsOutperform
Jul 2020Wolfe ResearchDowngradesPeer PerformUnderperform
Jun 2020BernsteinDowngradesOutperformMarket Perform

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