Delta Will Take Bombardier Jets--Update

By Doug Cameron 

Delta Air Lines Inc. said it doesn't expect to pay any of the tariffs proposed by U.S. trade officials on new Canadian jetliners and still plans to take delivery of the Bombardier Inc. planes.

U.S. trade officials have outlined plans for tariffs that would potentially quadruple the price of the CSeries planes after upholding a complaint from Boeing Co. that Bombardier benefited from unfair government subsidies. The move has fueled a trade spat between the U.S. and Canada that has also embroiled the U.K., home to a big Bombardier plant.

Delta Chief Executive Ed Bastian said he didn't expect any tariffs to be imposed, claiming Boeing's case was weak. He said on an earnings call that initial deliveries from its 75-plane order slated for next spring could be delayed as it works through the issues with Bombardier, but the airline still expects to pay the contractual price.

The airline has called for the case to be dropped, arguing that Boeing wasn't harmed as it didn't offer a competing jet. A U.S trade panel is due to rule next February on whether Boeing suffered any harm, which if it does would trigger the proposed tariffs.

Mr. Bastian's comments came as Delta reported better-than-expected quarterly profits and said the revenue environment was improving even after hurricanes disrupted its network.

The Atlanta-based airline opened the reporting season for what is traditionally the industry's busiest and most profitable quarter, but one that this year has been hit by multiple weather disruptions and an outbreak of fare wars that are expected to depress earnings.

Delta said profits dipped to $1.18 billion in the quarter to Sept. 30 from $1.26 billion a year earlier but forecast its keenly watched average passenger revenue would rise by 2% to 4% in the fourth quarter. Earnings per share slipped to $1.64 from $1.69, but the $1.57 adjusted figure was ahead of the $1.54 consensus among analysts polled by Thomson Reuters.

U.S. airline shares fell sharply during the summer as efforts to boost fares and profits faltered because of intensifying competition on some of the busiest domestic routes from ultra low-cost carriers such as Spirit Airlines Inc.

Delta's average passenger revenue climbed 3.6% in the quarter compared with a year earlier, a positive trajectory that is expected to continue through the end of the year.

American and United Continental Holdings Inc. this week raised their own guidance for average passenger revenue for the third quarter, sparking a rally in airline stocks.

Write to Doug Cameron at [e-mail]

(END) Dow Jones Newswires

October 11, 2017 11:22 ET (15:22 GMT)

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