Boeing can definitely afford to discount the 737-700 heavily:
- They've recouped all the investments associated in manufacturing the -700. Bombardier has to set up new production lines and it will be years before they reach breakeven point.
- Boeing can offer the older -700 at a steep discount, while offering the new MAX 7 at a standard discount -- protecting future profitability. Bombardier can't do the same with the CSeries since they don't have old vs. new models to offer.
- Boeing may be offering the -700 as part of a "package deal" with an upcoming 777-300ER order. So the average discount between, while very aggressive, is still workable for Boeing. Bombardier can't offer mainlines any package deals for the CSeries unless they partner up with e.g. Airbus (hence they tried).