Delta refuses to pay tariffs on Bombardier CSeries jets

NEW YORK (Reuters) - Delta Air Lines Inc on Wednesday said it would refuse to pay a 300 percent U.S. tariff on Canadian-built Bombardier CSeries jets, raising doubts about its purchase of 75 of the new aircraft at a list price of more than $5 billion.

FILE PHOTO: A Delta Airlines jet takes off from Washington National Airport in Washington, U.S., August 9, 2017. REUTERS/Joshua Roberts/File Photo

“We’re not going to be forced to pay tariffs or anything of the ilk,” Delta Chief Executive Ed Bastian said on the company’s third-quarter earnings call.

Delta is the only major U.S. carrier to buy the CSeries so far, and Bastian called the U.S. Commerce Department’s decision to impose anti-dumping duties on the jets “nonsensical.”

He said Delta still expects to take delivery of the CSeries order, however.

The U.S. tariff decision, sparked by rival planemaker Boeing Co, stems from a claim that Bombardier used Canadian government subsidies to bankroll the CSeries sale to Delta and dump the planes at “absurdly low” prices.

The proposed duties would not take effect unless affirmed by the U.S. International Trade Commission (ITC) early next year.

Shares of Bombardier, which is based in Canada, were up 3.78 percent at $2.34 in afternoon trading.

Delta shares were up slightly, 0.85 percent at $53.15, on the airline’s stronger-than-expected third-quarter results.

Responding to Bastian’s remarks, Bombardier said it was “confident the ITC will reach the right conclusion given that Boeing did not compete for the Delta order.”

“Delta has been supporting Bombardier throughout the process and its CEO, Ed Bastian, reaffirmed the airline’s intention to take possession of its CSeries aircraft. This is the message that we should get out of this,” spokesman Simon Letendre said.

How the extra costs of the planes would be covered remained unclear. Bombardier has also said it would not pick up the tab for the trade duties. [nL8N1M75O0]

The CSeries dispute has spiraled into a broader discussion of trade agreements between the United States and Canada, as U.S. President Donald Trump has warned he would terminate the tri-national North American Free Trade Agreement unless changes were made to address deficits within the trade pact.

Reporting by Alana Wise; editing by David Gregorio and Tom Brown