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Canada to Cancel $5.2B Boeing Fighter Jet Contract

07 December 2017

The Canadian government is contemplating buying used F/A-18 Hornets from Australia instead of procuring new Super Hornet planes directly from Boeing, a move that would be a major blow to the company's fresh new aircraft line, Defense News reports.

OTTAWA-Industry sources say the Trudeau government is preparing to push back the expected delivery date of a new fighter jet to replace Canada's aging CF-18 fleet.

Boeing argued that Bombardier - which sold its new C-series commercial jets to American company Delta Air Lines - was given a competitive advantage against other companies by receiving Canadian government subsidies.

Read the whole story from Reuters. The Royal Canadian Air Force (RCAF) will likely purchase 28-30 used fighter planes from the Australian military, according to reports Tuesday.

The Australian jets are being considered as interim fighters. RCAF now operates an ageing fleet of CF-18 fighters, which is due for replacement sometime in the next decade.

Boeing complained to the USA government that Bombardier was receiving subsidies, which in turn allowed it to sell its C-Series civilian passenger aircraft at below-market prices.

The move to try to acquire fighter jets from Australia coincides with the US government's decision, based on a Boeing complaint, to hit Bombardier with nearly 300 per cent duties on its CSeries civilian passenger jet.

However, Boeing Defense President and CEO Leanne Caret's reaction might offer observers a hint. It would be a deeply unfortunate outcome. That legal process continues with final rulings expected by the U.S. International Trade Commission early next year.

In buying older Australian Super Hornets, Canada would be buying a cheaper aircraft, not need to retrain its pilots, nor spend money on a new supply chain, one source said.

Canada's decision to cancel the Super Hornet purchase, which is reported by several sources citing information from the Liberal Party in Ottawa, also heightens manufacturers' concerns about the ongoing review of NAFTA.