A U.S. trade tribunal on Friday threw out Boeing's case against the Bombardier CSeries jet and quashed the prospect of crippling tariffs that would have closed off the U.S. market to the Canadian aircraft.
The four-person U.S. International Trade Commission (ITC) voted unanimously after concluding that Boeing was not harmed by Bombardier's sale of the jet to Delta Air Lines.
Boeing is "not materially injured or threatened with material injury" by imports of the CSeries, the ITC ruled.
The unexpected result killed a proposal by the U.S. Commerce Department that would have imposed tariffs quadrupling the price of the jet for U.S. airlines.
In a preliminary ruling in June, the ITC found that Boeing had presented "a reasonable indication" of harm to its business and so allowed Commerce to proceed with its process of determining tariffs pending a final decision.
Friday's outcome is a stunning reversal.
In a statement, Montreal-based Bombardier declared the result "a victory for innovation, competition, and the rule of law."
"It is also a victory for U.S. airlines and the U.S. traveling public," Bombardier added.
Boeing argued before the ITC that the CSeries was first developed and then later saved from complete financial collapse by large subsidies from the governments of Canada and the U.K.
The jet is assembled in Mirabel, Quebec. Its wings are built in Belfast in the U.K.
Boeing also claimed that Bombardier was guilty of "dumping" the aircraft in the U.S. market by selling 75 of the jets to Delta in 2016 at a very low price.
Bombardier countered that because Delta at that time was explicitly looking for smaller airplanes, Boeing hadn't even offered its own jets in that sales campaign.
Bombardier offered Delta the CS100, which has 110 seats, smaller than any plane Boeing builds.
In response, Boeing offered Delta some used 106-seat E190 jets made by Embraer of Brazil that it had obtained in a trade during a sale of its own jets to Air Canada.
In testimony last year before the ITC, Greg May, Senior Vice President of Fleet and Supply Chain Management at Delta, said Boeing had at no point offered any of its own jets in that sales campaign.
"It would be wrong to suggest that Boeing lost sales to Delta because we purchased the CS100," May said then. "Boeing simply was not in the mix. They did not have a plane that satisfied our mission."
This detail must have been key in the ITC determination that Boeing was not harmed.
Delta moves ahead on CSeriesThe ITC is an independent commission, appointed by the government and evenly split between Democrats and Republicans, that is charged with investigating the effects on the U.S. economy of dumped and subsidized imports.
In this case, the commissioners ruled to reject the determination of the Commerce Department, which under President Donald Trump has taken a new, confrontational line on many trade issues _ including repeated criticisms of Canada over lumber imports and the North American Free Trade Agreement (NAFTA).
The four current commissioners were appointed by previous presidents Barack Obama and George W. Bush.
Their decision means the CSeries will enter the U.S. market as early as this spring.
Delta's first CSeries delivery, which had been set for April and was on hold, can now go ahead.
In a statement Delta said the airline "is pleased by the ITC's ruling rejecting Boeing's anticompetitive attempt to deny U.S. airlines and the U.S. traveling public access to the state-of-the-art 110-seat CS100 aircraft when Boeing offers no viable alternative."
Delta "looks forward to introducing the innovative CS100 to its fleet," the statement added.
Boeing in a statement said, "We are disappointed that the International Trade Commission did not recognize the harm that Boeing has suffered from the billions of dollars in illegal government subsidies."
The ITC result is also a big win for Airbus, which by year end should own a majority of the CSeries program.
In October, Boeing's great rival stunned the aviation world by announcing that it would bail out Bombardier by acquiring a majority stake in the CSeries.
Airbus promised to set up an assembly line to build the planes for the U.S. market in Mobile, Ala.
Airbus also has options to buy out the smaller CSeries stakes of Bombardier and the government of Quebec, meaning it could take full ownership around 2026.
The CSeries is an all-new, small single-aisle jet family with a five-abreast passenger cabin that's offered in two models: the CS100, seating 100 to 135 passengers, and the larger CS300, seating up to 160 passengers.
It's optimized for the smaller end of the commercial-airliner market, with carbon-fiber composite wings, a metal fuselage and new Pratt & Whitney geared turbofan engines.
With Airbus set to close its deal for the CSeries, Boeing is currently negotiating a possible agreement to acquire all or part of Bombardier's rival, Embraer of Brazil.
The U.S. trade court decision may ease tensions that had developed over the case between the U.S. and its two close allies, Canada and Britain.
Because of its displeasure over the previous CSeries rulings, the Canadian government had put on hold an all-but completed deal to buy Boeing F/A-18 jet fighters valued at $5.2 billion.
It's unclear if the CSeries court victory may save that sale for Boeing.
