There is a fine line between discounting and selling aircraft below your cost of production when you know you are backed by the state, says Embraer Commercial Aircraft chief John Slattery on the on-going dispute with Bombardier.
"There is a unique difference between discounting below your cost of production, and backfilling that shortfall, that loss with the confidence knowing that you're getting a sovereign supported equity investment or subsidy," he says in an interview with FlightGlobal at the IATA annual general meeting in Cancun.
The nuance applies to support receive by Bombardier from the Canadian government for the CSeries programme, which by some estimates tops $2.5 billion.
The smaller CSeries variant, the CS100, competes with the Embraer 190-E2 and 195-E2, which are set to enter service in 2018 and 2019, respectively.
There are two separate complaints against Bombardier. One by Boeing at the US International Trade Commission focuses on the airframer's sale of 75 CS100s to Delta Air Lines in 2016, claiming the aircraft were essentially dumped in the market hurting the viability of its own 737.
"Boeing doesn't even make a product that competes with the aircraft Bombardier offered," said Peter Lichtenbaum, an attorney representing Bombardier, at a May hearing. "Aircraft are not like shampoo, where getting 30% more for a comparable price is a bonus."
Boeing estimates that Bombardier sold the CSeries at around $20 million per aircraft – well below the aircraft's $79.5 million list price – to Delta, in its complaint.
Bombardier denies the pricing estimate, saying it is "way off".
Brazil has filed a separate complaint with the World Trade Organization focused on what it claims amount to $4 billion in illegal subsidies from the Canadian government.
Embraer supports Brazil at the WTO and is an observer to Boeing's case with the US body, says Slattery.
Both the US ITC and WTO complaints are on going.
Source: Cirium Dashboard
