The Boeing Company (NYSE:BA) reported first-quarter 2017 earnings that beat estimates but fell short on sales, followed soon thereafter by it leaders asking the Commerce Department to investigate unfair competition.
The company’s request follows President Trump’s plan to renegotiate the North American Free Trade Agreement with the leaders of Mexico and Canada. To that end, Boeing is claiming that Canada’s Bombardier Inc. (Toronto:BBD-B.TO) is dumping planes at an “absurdly low” price of just $19.5 million, which the U.S.-based manufacturer suspects could be well below its rival’s costs.
At such a low price point, Boeing cannot compete with its comparable plane, the Boeing 737-700 model, priced at roughly $83.4 million. Bombardier poses a genuine threat to Boeing in the 100-1xx passenger commercial aircraft segment and the Canadian company swooped in to win a contract with Delta Airlines (NYSE: DAL) in 2016 for 75 planes worth $5.6 billion.
But Boeing’s concern about potentially unfair competition goes beyond Bombardier, since the U.S. company took a shot at its European rival AIRBUS (XETRA:AIR.DE) by claiming its competitor across the Atlantic Ocean has been unfairly selling its plans below cost. Boeing currently has a complaint before the World Trade Organization (WTO).
The Commerce Department responded to the complaints by committing to take “a thorough review” of the situation. If either Bombardier or Airbus, if not both, are found to be dumping planes on the market, Boeing could see a big lift if the WTO rules in its favor. The company could win contracts back that previously had been awarded to its competition.
Click here to read the full article, “Boeing’s ‘Fair Trade’ Fight Could Help Stock Climb.”