Military

Boeing, 'Scared Stupid' by Trump, Went After Bombardier

Paul Ausick

Published: October 12, 2017 9:45 am

Last Updated: January 12, 2020 7:15 am

On the airline’s conference call Wednesday, Delta Air Lines Inc. (NYSE: DAL) CEO Ed Bastian said the he does not expect Delta to have to pay the 80% tariff recommended last week on the 75 Canadian-built Bombardier CS-100 passenger jets the airline ordered earlier this year. Is that a realistic statement or just bravado?

In a podcast at Aviation Week’s website, Teal Group vice president and long-time aerospace industry analyst, Richard Aboulafia, replied to a question about Boeing Co.’s (NYSE: BA) motivation for seeking a tariff on the Canadian planes after losing out on the Delta contract.

Q: Did Boeing pick this fight with Bombardier to appease or impress the President of the United States?

Aboulafia: I think that’s a big part of it. … I think [Boeing] saw an opportunity and it was a tactically clever move to turn a threat into an alliance and it’s been going pretty well, but I think with this [tariff], I think they’re going too far with it.

The build-up to that answer is unusually blunt. When first asked if Boeing’s motivation for the complaint was really aimed at Chinese aircraft maker Comac, Aboulafia said he “completely” disagreed with that view. He elaborated:

Let’s look at [Boeing’s] motivation. First thing that happened when Trump took office was he tweeted at them. It was an attack. He went after Air Force One to “cancel order.” Simultaneously he threatened to impose a 45% tariff on Chinese imports which would have closed off [Boeing’s] biggest single export market by way of retaliation. At the same time he criticized the Super Hornet effectively as a piece of junk.

If I were Boeing management, I would be scared stupid. And frankly I think [Boeing] reacted by doing everything they can to help [Trump] pander to his economic nationalist base.

That’s what’s going on here because, frankly, the only thing worse than being best friends with the school bully is being on the receiving end of the school bully’s bullying.

The full podcast is available here and Aboulafia’s September newsletter, which includes a more detailed analysis of the Boeing-Bombardier fracas, is available here.

It’s worth noting that Boeing’s trade complaint against Bombardier does have some merit, but Aboulafia believes that Boeing did not act in its own best interest in making the complaint. His comments to Aviation Week make the company’s motivations abundantly clear.

24/7 Wall St.
Where Boeing Might Look to Meet Challenges From Acquisitive Competitors