Embraer calls for industry limits on aircraft development funding

Tue Dec 20, 2016 3:05pm EST
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By Brad Haynes

SAO PAULO (Reuters) - Brazilian planemaker Embraer SA (EMBR3.SA: Quote) called on Tuesday for the aviation industry to set limits on state funding of aircraft development, a day after Brazil said it would challenge Canada over government support for rival Bombardier Inc (BBDb.TO: Quote).

Embraer Chief Executive Paulo Cesar Silva said the aviation industry's standards for export financing by state banks had worked well to promote fair competition between Embraer, Bombardier and larger peers Boeing (BA.N: Quote) and Airbus (AIR.PA: Quote).

"If the industry can establish a framework for aircraft development financing similar to what we have for export financing, then we'll have a level playing field," Silva told journalists.

The timing may be tough for an industry accord, however, after Brazil said on Monday it would dispute investments made by the province of Quebec in Bombardier's CSeries, which helped to develop a direct competitor for Embraer's E-195.

Silva said the capital injection had helped Bombardier sell the CSeries at cut-rate prices to Delta Air Lines Inc (DAL.N: Quote) in April and there were signs of similarly aggressive pricing in other ongoing U.S. sales campaigns.

Bombardier did not immediately respond to a request for comment.

The latest standoff at the World Trade Organization (WTO) recalls nearly a decade of sparring between Brazil and Canada over state financing for Embraer and Bombardier's exports. Silva's comments on the rules that settled those disputes shows the Brazilians may be looking ahead to industry-wide talks.

Silva said it is especially important to set limits as new entrants from Russia, Japan and China are challenging Embraer's and Bombardier's duopoly in the regional jet market, in some cases with generous government backing.   Continued...

Brazilian aircraft manufacturer Embraer's CEO Paulo Cesar Silva poses in front of a new commercial aircraft E-175 jet, rolled-out in Sao Jose dos Campos, north from Sao Paulo March 12, 2014. REUTERS/Paulo Whitaker