Homepage / Technology / Boeing says Bombardier jets could still face hefty duties even if they are assembled in Alabama
Alibaba’s Jack Ma says bitcoin is 'likely' a bubble while embracing its underlying blockchain tech Netflix is on pace for its worst day in 2 years Carnival shares plunge the most in 2 years after slashing full-year forecast Even amid a potential trade war, US stocks are still beating the rest of the world Chip stocks plunge after Trump's reported plan to restrict foreign technology investment Apple will have a special news section for the midterm elections, curated by human editors Amazon could double Whole Foods' customer base with Prime perks: Analyst Goldman Sachs-backed Circle sees boom in crypto demand from institutional investors, despite bear market Treasury Secretary Mnuchin says investment restrictions will apply to 'all countries that are trying to steal our technology' Former Starbucks CEO Howard Schultz calls the stock ‘cheap,’ but some say it’s cheap for a reason AT&T to buy online ad firm AppNexus US new home sales surge in May Buy AMD because of its ‘generational opportunity’ to gain share against Intel: Bank of America 'This isn't even a tech index': Ex-NYSE president Tom Farley throws shade at the Nasdaq Legendary investor Bill Miller reveals the biggest mistake value investors are making now Majority of Americans approve of Trump's handling of the economy for the first time: CNBC survey Microsoft given buy rating because of cloud computing growth Intel is downgraded due to ‘lack of leadership’ after CEO resignation; shares fall Here are 5 reasons why your portfolio isn't performing well China extends its lead as the most prolific make of supercomputers Uber kicks off a fight to keep operating in one of its most important cities Erdogan wins more power, and it might not help Turkey's economy Beyond the South China Sea: Beijing may target these waterways next European markets seen lower on trade, migration concerns India has proposed a new fix for its bad debt problem. It may not be enough One of the world's hottest property markets is readying a contentious change US to give North Korea post-summit timeline with 'asks' soon, official says Trump is reportedly planning major new restrictions against China Asia set for a cautious open as US-China trade tensions simmer Many companies at Cannes Lions had yachts, but Google, Facebook, Spotify and Twitter have beaches Tech could soon turn into the market's headache: Wells Fargo's Chris Harvey Forget millennials: Here's a good reason why Apple should hire your grandmother How Amazon's roaring success selling batteries is making it wonder which market it can disrupt next A company is showing how blockchain is more than just cryptocurrency — it can also cut food waste AT&T and Verizon have drones that could provide cell service and save lives this hurricane season How the Supreme Court may have made Web shopping pricier for just about everyone but Amazon How to choose between an Amazon Echo, a Google Home and an Apple HomePod Electric scooters draw hordes of investors and avid users — but a number of critics as well This floating robotic factory will build satellites and spaceships in orbit Meet the man whose job it is to reassure people that Google search isn’t evil Euro is here to stay: German finance minister China's ZTE expected to take last step to lift ban Cramer Remix: The best way to play the stress test results Red Hat CEO on earnings-led stock drop: 'I would encourage investors to look long term' Apple launches free repair program for MacBook and MacBook Pro keyboards The founder of JetBlue is about to start a new airline Tesla is suing an ex-employee for hacking into its 'MOS' software — here's what that system does Morgan Stanley sees 'a pattern forming' of the space industry developing like self-driving cars Buy Intel shares because its CEO change will not hurt the chipmaker: Credit Suisse Xiaomi reportedly awards founder $1.5 billion in stock ahead of IPO Tesla reports another fire at Fremont factory Tesla shares drop after analyst raises concern over a rise in its services costs Increased threat of a trade war is ramping up fears of a 'full-blown recession' CarMax shares surge to record high, on pace for their best day in 4 years If energy can clear one hard-to-break level, it’s off to the races, chart watcher says Warren Buffett: 'Any time the market takes a sharp dive,' read this book Supreme Court rules warrants required for cellphone location data Trump urges OPEC to 'keep prices down' as oil cartel's meeting wraps up Cramer: Strength in tech and retail has 'masked' weakness in the broader market Buy EA shares because it is ‘building a Netflix for video games’: Needham What’s at stake in Turkey’s elections, and why Erdogan could actually lose Facebook’s ‘lack of accountability’ in its data scandal spurs European sustainability fund to dump shares Goldman Sachs: GE should suspend dividend for the next 18 months OPEC ministers strike deal on oil production levels Stocks making the biggest moves premarket: BB, MDT, URI, JPM, BAC & more Pro tips on taking great video of your vacation — right from your phone All 35 times the market did this, stocks ended the year higher Bitcoin tumbles after Japan watchdog orders exchanges to beef up practices against money laundering Husband cheating? Ashley Madison says member signups spiked in these cities last year James Comey: Public anger about migrant children is ‘why Trump ran’ from the policy Chinese stocks are flirting with bear market territory as trade worries fester BlackBerry posts quarterly loss Friday will likely be the year's biggest stock market volume day with big action in Apple, JP Morgan Rival Koreas agree to reunions of war-separated families US companies like Micron are accusing China of intimidation and outright theft to dominate tech Disney said it's willing to divest more Fox assets for to get a deal cleared by regulators Tesla is preparing to close a dozen solar facilities in 9 states Uber driver was streaming Hulu show 'The Voice' just before self-driving car crash: Police report OPEC heads into showdown over oil output, with Saudi Arabia and Iran on different sides Chinese media says US has 'delusions' as impact of trade war spreads YouTube introduces paid subscriptions and merchandise selling in bid to help creators monetize the platform Airbus says no-deal Brexit would force it to reconsider UK presence European stocks seen slightly higher ahead of OPEC meeting Euro zone hits 'historic moment' as it closes eight years of financial support to Greece Trade tensions are the biggest risk for the euro zone, the IMF says With freedom to drive, Saudi Arabia's women could change the economy Taiwan's Foxconn says biggest challenge is US-China trade war Euro zone agrees on debt relief package for Greece Asian shares set to decline, taking cues from Wall Street's losses; OPEC meeting ahead Chevrolet is bringing back the Blazer as a crossover Cramer Remix: It was the hottest group in the market until Red Hat reported SpaceX’s Falcon Heavy rocket wins Air Force certification and a $130 million contract Cramer goes out on a limb in support of chipmaker Micron Okta CEO explains why his cybersecurity company has a leg up on big-name tech giants like Microsoft Cramer: CEO change aside, Intel's stock is too cheap at these levels The head of Amazon's marketplace has lost most of his authority amid internal shake-up Alphabet reportedly may spin out molten-salt project with Bill Gates' $1 billion energy fund Red Hat slides on low guidance Tax automation company soars after Supreme Court decision Why Amazon is the winner of the Supreme Court sales tax ruling

Technology

Boeing says Bombardier jets could still face hefty duties even if they are assembled in Alabama

Boeing Co said on Tuesday that Bombardier Inc’s CSeries jets could still be hit with high U.S. import duties, even if they are assembled in Alabama through an industry-changing deal with Airbus.

The deal announced on Monday gives Airbus a majority stake in Bombardier’s troubled CSeries jetliner programme, securing the plane’s future and giving the Canadian firm a possible way out of a damaging trade dispute with Boeing, in which the U.S. Commerce Department has threatened to impose a 300 percent import duties.

Boeing said that the announced deal has no effect on the pending U.S. Department of Commerce proceedings. “Any duties finally levied against the C-Series… will have to be paid on any imported C-Series airplane or part, or it will not be permitted into the country,” Michael Luttig, Boeing’s general counsel, said in a statement.

Investors cheered the winners of the deal that is set to shake up the $125 billion a year market for large jets. Bombardier shares jumped 15.7 percent on Tuesday, while shares in Toulouse, France-based Airbus rose 4.8 percent.

The transaction would give Airbus a 50.01 percent stake in an entity recently carved out of Bombardier to produce and market the CSeries, four years after it first flew with a goal to enter the large jets market.

But in a move emblematic of the huge risks of aerospace competition, Bombardier will get just one dollar for the majority stake in exchange for Airbus’s purchasing and marketing power to support an aircraft that has won fans for its fuel efficiency but had not secured a new order in 18 months for the 110-130 seat plane due to doubts over its future.

Bombardier’s strategy of performing final assembly in Alabama might allow the CSeries to avoid duties because the trade case targets partially and fully-assembled aircraft, said U.S. international trade lawyer William Perry.

Bombardier and Airbus could argue they are importing parts, like the wing from Northern Ireland, to be assembled in the United States.

“That may be the loophole Bombardier is hoping to use,” he said by phone.

In reality, the terms of the deal mean Bombardier could pay Airbus to take over by agreeing to underwrite $700 million of risks related to cost overruns in coming years.

“It’s an unexpected move by Airbus but indicates they see good market potential for the CSeries. Neither they nor Boeing currently offer an aircraft in the regional jet market,” said aerospace consultant John Strickland of JLS Consulting.

The deal is similar to one that Airbus walked away from in 2015 when it decided the investment in a plane that had not yet entered service was too risky – with one major difference: that some of the jets will be produced in the United States.

That could change the power balance in Bombardier’s costly trade dispute with Boeing, though it is not the main reason why the two former rivals have come together, executives said.

“Assembly in the U.S. can resolve the (tariff) issue because it then becomes a domestic product,” Bombardier’s chief executive, Alain Bellemare, told reporters at Airbus’s headquarters in Toulouse.

Airbus CEO Tom Enders hailed the tie-up as “a win for Canada … a win for the UK,” referring to Bombardier’s wing-making factory in Northern Ireland whose future had been threatened by the distant trade war.

He said it would also create new U.S. jobs. The deal appeared to catch Boeing off guard. Locked in a separate 13-year trade dispute with Airbus, Boeing on Monday called it a “questionable deal” between two of its subsidized competitors.

Bellemare said he hoped the deal would be approved within six to 12 months. Canadian Innovation Minister Navdeep Bains, who must officially decide whether to green-light the deal, said it looked like “Bombardier’s new proposed partnership … would help position the CSeries for success”.

Bombardier said the partnership should more than double the value of the CSeries program.

While it will lose control of a project developed at a cost of $6 billion, the deal gives the CSeries improved economies of scale and a better sales network.

For Airbus, the deal strengthens the bottom end of its narrowbody portfolio after poor sales of its own A319 model and expands its global footprint, potentially opening up further deals in other sectors in Canada.

Tony Webber, a former chief economist at Qantas, said the CSeries could complement Airbus’s existing single-aisle models.

Bellemare said the deal was expected to close in the second half of 2018.

“We’re doing this deal here not because of this Boeing petition. We are doing this deal because it is the right strategic move for Bombardier,” he said, referring to Boeing’s complaint that the Canadian firm received illegal subsidies and dumped CSeries planes at “absurdly low” prices.

Bombardier said the deal would not result in job losses and would keep the head office in Montreal. Unions said the deal could benefit workers.

The Boeing-Bombardier dispute has snowballed into a bigger multilateral trade dispute, with British Prime Minister Theresa May asking U.S. President Donald Trump to intervene to save British jobs.

Bombardier is the largest manufacturing employer in Northern Ireland and May’s Conservatives rely on the support of the small Northern Irish Democratic Unionist Party (DUP) party for their majority in parliament.

Business Secretary Greg Clark said Britain would work closely with the planemakers, while the DUP said the agreement was “incredibly significant news” for Belfast.

Talks for the deal between Airbus and Bombardier first started over dinner at the end of August.

Enders said the deal was different from an earlier round of talks in 2015, when he abruptly ordered an end to negotiations. He said the CSeries’ had since been certified, entered service and was performing well.

Some analysts said the deal could drive Boeing closer together with Brazil’s Embraer, with which it already cooperates.

Bombardier is in the middle of a five-year turnaround plan after considering bankruptcy because of a cash-crunch as it developed multiple planes simultaneously, including the CSeries.

Source: Tech CNBC
Boeing says Bombardier jets could still face hefty duties even if they are assembled in Alabama

Comments are closed.