Canada’s iconic aerospace company, Bombardier (OTCBB: BDRBF), faces many headwinds. Despite notable plane orders, the company has many unknowns it must overcome.
The U.S. commerce imposed on September 26 a shocking 219% tariff on CSeries jets. Boeing (NYSE: BA) complained that Bombardier received unfair government subsidies. But after the Canadian company won a multi-billion-dollar deal with Delta Air Lines (NYSE: DAL), Boeing complained.
Expect Canada to file a case with the World Trade Organization.
The timing of the ruling coinciding with NAFTA negotiations is unfortunate for Bombardier. The Trump administration could use the Bombardier as a case arguing against the unfairness of NAFTA for the U.S.
The Delta Air Lines order represents 25% of Bombardier’s order book. It, along with Bombardier, have much to lose if the tariffs are upheld. Conversely, if Bombardier and the Canadian government succeed in reversing the decision. Boeing will be at a disadvantage in the long-run. The Bombardier C-Series sources half of the parts from U.S. companies. Boeing is using more outsourcing from companies in Asia.
Takeaway
Bombardier faces many uncertainties ahead but order wins could keep the stock from falling further. Investors should have a multi-quarter time frame when investing in the stock.
