Bombardier gets millions from Canada for Global 7000, C Series

Bombardier gets millions from Canada for Global 7000, C Series

Bombardier gets millions from Canada for Global 7000, C Series

That investment angered Brazilian aircraft manufacturer Embraer, Bombardier's prime competitor, and the company urged the Brazilian government to challenge Canada at the WTO.

In July, Canada's government said it was following trade rules in the case.

Last year, Bombardier (TSX:BBD.B) received a US$1-billion investment for the CSeries passenger jet program from the Quebec government in exchange for a 49.5-per-cent stake.

"In Brazil's understanding, Canadian subsidies artificially affect the worldwide competitiveness of the sector, in a manner incompatible with Canada's obligations to the WTO", Brazil's Ministry of Foreign Affairs said in a statement.

The remainder will support continued development of the narrow-body C Series passenger jets, which entered service past year. "New support that has been announced could further deepen the distortions in the aerospace sector in detriment to Brazilian interests".

Brazil said it has submitted a request for consultations with Canada under the World Trade Organization's dispute settlement system, and says the two countries should agree on the timing and location of talks within the coming weeks.

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Embraer chief executive officer Paulo Cesar Silva said the subsidies have helped the CSeries program survive and allowed Bombardier to sell the planes at below market low prices.

Bombardier rival Embraer says it supports Brazil's move to challenge what it says is US$4 billion in support from various levels of government, including US$2.5 billion past year alone. The company also sold a 30 per cent holding in its railway division for $1.5 billion to Quebec-based pension fund manager Caisse de dépôt.

Brazil, which had threatened in December to launch a trade complaint, said the move will give it access to additional information about support to Bombardier.

A spokesman for Champagne said Wednesday after Brazil's trade complaint was announced that the federal government is confident that the loans respect global law.

Through its strategic aerospace and defence initiative (SADI), the government will provide the portion of the loan earmarked for Bombardier's Global 7000 jet programme, while the remainder will be funded through the government's existing contribution agreements with Bombardier.

"This is the best plane in its class, so people are finding ways to come after us", Bellemare said.

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