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Abu Dhabi, UAEMonday 17 December 2018

JetBlue targets Boeing in Bombardier rumpus

Carrier wants regulators to dismiss US plane maker's claims against Canadian peer

Models of Boeing aircraft. The US carrier JetBlue has joined calls on regulators to throw out the plane maker's claims against Bombardier. Jason Lee/Reuters
Models of Boeing aircraft. The US carrier JetBlue has joined calls on regulators to throw out the plane maker's claims against Bombardier. Jason Lee/Reuters

JetBlue Airways is urging US regulators to reject Boeing's fair-trade complaints against Bombardier as the New York-based airline considers adding new planes to its fleet.

Boeing’s claim that Bombardier sold its C Series jets in the US at less than fair value thanks to Canadian government subsidies presents “a threat to JetBlue’s ability to continue to innovate and provide benefits to the flying public”, the chief executive Robin Hayes said in a letter filed on Monday with the US International Trade Commission.

JetBlue plans to decide by the end of the year on changes to its fleet, including whether to replace its Embraer E190s, possibly with the C Series. The airline has held talks off-and-on with Bombardier, Bloomberg reported last year.

In his letter, Mr Hayes urged the commission "to reject the petitions and permit free and unfettered competition in the aircraft manufacturing sector".

The C Series is the only aircraft offering five seats abreast, aligning it with JetBlue’s “history of product differentiation,” he said, and has potential to reduce operating costs in line with JetBlue’s low-cost model. Boeing makes no comparable aircraft, the letter said.

JetBlue currently flies planes made by France’s Airbus and Brazil’s Embraer. It is at least the third airline to file a letter in support of Bombardier that does not operate its planes, following Spirit Airlines and Sun Country Airlines.

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The letter reflects JetBlue’s general position that competition is good for the airline industry, said Doug McGraw, a spokesman. Boeing had no immediate comment, said Dan Curran, a spokesman.

The US commerce department will release a preliminary ruling on Tuesday on whether to impose countervailing duties on Bombardier.

Boeing says Bombardier was able to offer attractive pricing to Delta Air Lines last year - in a deal for at least 75 aircraft - because of government assistance. Quebec’s provincial government invested US$1 billion last year for a 49.5 per cent stake in the C Series, and its federal counterpart followed this year with a $301 million financing package for two of Bombardier’s jet programmes, including the C Series.

In June, the US trade commission ruled that Boeing’s commercial jet business may have been harmed by Bombardier.

The news of JetBlue's move came as Boeing opened an office for a potential new mid-market jet and named a leader for the project, taking it a step closer to deciding whether to launch the new airplane, according to a staff memo seen by Reuters.

The "New Mid-market Airplane" office will be run by Mark Jenks who currently heads the 787 Dreamliner programme.

"I am pleased to announce the creation of a new programme office to move us one step closer to a decision on a New Mid-market Airplane (NMA) and also serve as a vehicle to evolve how we design and build airplanes," the Boeing Commercial Airplanes chief executive Kevin McAllister said in the memo.

A Boeing spokesman confirmed the contents of the memo.

The memo gave no indication on whether or when Boeing might commit to building the new jet, which industry sources expect to seat 220 to 260 passengers. The plane would fit between the 737 series of single aisle jets, and the wide body 787.