Boeing ready to throw in towel on Canadian interim fighter purchase

Boeing appears to be throwing in the towel on the notion of Canada buying a handful of Super Hornet jet fighters.

The Chicago-based company issued a statement Friday acknowledging reports coming out of Ottawa all week that the Liberal government is prepared to forego the purchase of 18 brand new fighters in favour of a deal to acquire a similar number of used "Classic" F-18 Hornets from Australia.

"The Boeing Company respects the Canadian government's decision and applauds the government's continued use of a two-engine fighter solution, which is a critical part of their northern Arctic border defence, Norad co-operation, and coast to coast to coast security," said the statement.

The plan had been to buy the warplanes on a interim basis while federal officials straightened out the competition to replace the entire fleet of aging CF-18s.

Last fall, the Pentagon submitted a $6.3 billion proposal to the Canadian government in partnership with Boeing, but the deal fell apart amid a separate trade complaint over the importation of Bombardier-built passenger jets.

That dispute has resulted in the U.S. Commerce Department imposing a nearly 300 per cent duty on small-to-medium-sized passenger jets entering the American market.

A parade of Liberal cabinet ministers — from Prime Minister Justin Trudeau on down — have repeatedly said Boeing is no longer "a trusted partner" in the defence sector, and the government wouldn't be doing business with them.

The company has refused to halt the trade complaint and didn't back down in its written statement on Friday: "Our commitment to creating a level playing field in aerospace remains."

The offer to buy the Super Hornets isn't set to expire until near the end of the year, but it was clear Boeing is resigned to the fact it won't happen.

"Although we will not have the opportunity to grow our supply base, industrial partnerships and jobs in Canada the way we would if Canada purchased new Super Hornets, we will continue to look to find productive ways to work together in the future," the statement said.

Cooler heads

That is a significant point given the Liberal government intends next week to announce the beginning of the competition to replace the entire existing fleet of CF-18s. 

Earlier this week sources told CBC News the expected announcement will lay out a roadmap towards the planned tender call in 2019.

Significantly, the government is expected to use that period to not only consult with industry but develop a list of pre-qualified bidders.

Aside from weeding out companies that clearly don't meet the criteria, such a list could also be used as leverage on the trade front.

Dave Perry, an analyst with the Canadian Global Affairs Institute who follows the procurement file, said with the government moving towards a deal with Australia it is time to cool the rhetoric with Boeing, at least on the defence file.

"It would make sense for the government to get back to a rational, cooler dialogue," he said. "It's not helpful to exclude companies even in a rhetorical sense."

Boeing's military division manufactures more than just jets and is expected to be a contender in the air force's plan to buy air-to-air refuellers down the road.

Future competitions could very well be turned into sole-source deals without Boeing's participation, said Perry.