A YEAR ago Dennis Muilenburg, the chief executive of Boeing, the American aerospace giant, had a big problem. Tweets written by Donald Trump, America’s newly elected president, were hitting Boeing’s share price. Their value was initially lifted by the new president’s promise of extra spending on defence. But in December last year Boeing’s shares fell after a tweet from Mr Trump suggested that an order for new presidential planes worth $4bn should be cancelled. The newly-elected president then picked a fight with its rival Lockheed Martin over its new fighter jet; Boeing’s executives were left in fear of being the next target in his gunsight.

And so, it seemed, Mr Muilenburg came up with a plan: snuggle up to Mr Trump’s “America First” agenda to avoid the flack. Boeing started to stress in its press releases how many American jobs it was creating; it asked to president to unveil the first 787-10 jet produced in February and in April it filed a trade case against Bombardier, alleging that its Canadian rival has received unfair subsidies from Britain and Canada for the development of its new C-Series jetliners.

But as Gulliver pointed out in September, regarding its accusations against Bombardier, Boeing had taken off on a flight of hypocrisy against its rival. The American giant itself has received billions of dollars of state assistance, from generous military contracts placed by the federal government to $8.7bn in handouts from the Washington state government. And it has not made planes the size of the ones Bombardier wants to export to America since 2006. Pursuing the case would alienate Boeing’s international customers and would do more damage to Boeing than good, Gulliver warned:

Canada has also threatened to cancel a likely $5bn order of military jets from Boeing if the American company prevails against Bombardier; Britain could follow its lead. Several airlines, fearing less competition among planemakers, are unhappy with Boeing’s behaviour and privately threaten to shun its jets if it continues to bully its smaller rival. This may be the trade case that ends up costing Boeing much more than it has to gain.

That is exactly what has happened. Even though America’s Department of Commerce ruled in Boeing’s favour today—setting tariffs of 292% on imports of the C-Series from Canada—it is a Pyrrhic victory. In October Bombardier gave away half the C-Series for free to Boeing’s arch-rival Airbus, weakening the American firm’s position in market for smaller jetliners considerably. Then, in early December Canada announced that it was not going to proceed with an order for 18 Super Hornet fighter jets made by Boeing, losing the firm up to $6bn in revenue. A week later, on December 13th, it received another slap in the face, this time from Delta, America’s second biggest airline, which shunned Boeing’s 737 MAX aircraft in favour of buying 200 aircraft from Airbus, its arch-rival from Europe, worth around $25bn at list prices. Bosses from other airlines have also told Gulliver that they plan to favour Airbus’s jets in the near future until Boeing stops “bullying” Bombardier, which they suspect the American giant wants to destroy in order to protect its market power.

Airlines and flyers realise that they benefit from more competition in the market for jetliners, as it increases innovation and lowers the cost of buying aircraft. Aviation executives think that Boeing is attempting to destroy the competition with trade cases against both Bombardier and Airbus. But worse of all, in the process of pursuing these, it is hurting its own shareholders and employees by alienating its international customers. The company itself predicts that around 80% of orders for civil jetliners over the next twenty years will be from outside America. But they won’t stick around to buy from Boeing if it continues to follow a nationalist agenda. As Adam Pilarski, the former chief economist of McDonnell-Douglas (now part of Boeing) astutely notes, if the global aerospace giant wants to “act like a little whiny American company”, it will eventually end up as small as one too.

Source: economist
America’s Department of Commerce imposes a tariff of 292% on Bombardier’s C-Series jets