Boeing dispute derails sale of Super Hornet fighters to Canada: report

Canada will call off a planned buy of 18 Boeing Super Hornet fighter jets after a months-long dispute with the U.S. defense contractor, Reuters reported on Tuesday.

Three sources familiar with the matter told the news outlet that Canada will instead announce next week that it will purchase a used fleet of Australian F-18 jets, which Canada already operates.

Australian military officials had been in the Canadian capital of Ottawa in late November for talks, two of the sources said.

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Canada was in the midst of negotiations to buy the Boeing-made F/A-18s for an estimated $5.15 billion, but the country put talks on hold after the defense contractor in April filed a complaint with the U.S. Commerce Department against Canadian company Bombardier.

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. The funding allowed Bombardier to significantly lower the cost per aircraft, Boeing argued.

No U.S. company makes a C-series rival.

In response, the Commerce Department in September imposed a nearly 220-percent preliminary tariff on the C-series, but a final decision is not until 2018.

Canadian and United Kingdom officials, in turn, warned Boeing it could lose defense contracts in the countries over the complaint.

Canadian Prime Minister Justin Trudeau has said the country “won’t do business with a company that’s busy trying to sue us and put our aerospace workers out of business.”

And British Prime Minister Theresa May had even lobbied President Trump to ask Boeing to drop the complaint, prompted by the Bombardier plant in East Belfast, Northern Ireland, which employs about 4,000 people.

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.

Boeing declined to comment to Reuters.

Canada was looking to buy the Boeing aircraft as a placeholder for its fleet until a competition in 2019 to replace its aging CF-18 jets.