Embraer eyes WTO challenge to Bombardier state funding

Mon May 16, 2016 5:58pm EDT
 
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By Brad Haynes

SAO PAULO (Reuters) - Brazilian planemaker Embraer SA (EMBR3.SA: Quote) may challenge the state funding received by Canadian rival Bombardier Inc (BBDb.TO: Quote) at the World Trade Organization (WTO), a senior executive told Reuters on Monday.

Paulo Cesar Silva, the head of Embraer's commercial aviation unit, said in a telephone interview that favorable government financing has given Bombardier an unfair advantage in sales campaigns where its new CSeries is up against Embraer's E-Jets.

"The WTO is an alternative" to resolve the potential trade dispute, Silva said. "Another channel could be government-to-government talks. That might be the best way to avoid a dispute."

Embraer has reached out to the Brazilian government, but still needs details of Bombardier's financing arrangements before taking action, Silva added.

Brazil and Canada have locked horns repeatedly at the WTO over the past two decades regarding state support for Embraer and Bombardier, the world's biggest commercial planemakers after powerhouses Boeing Co (BA.N: Quote) and Airbus Group (AIR.PA: Quote).

Bombardier secured $1 billion for its C Series program from the Quebec government last year and has asked Canada's federal government to match the investment.

Embraer's concerns about the funding boiled over last month when Bombardier won an aggressive bid for 75 aircraft for U.S. carrier Delta Air Lines Inc.

Several industry sources have pegged the discount close to two-thirds off the nominal CS100 list price of $71.8 million, but people close to Bombardier have denied this.   Continued...

 
Brazilian aircraft maker Embraer's CEO Frederico Curado salutes workers next to an new Embraer E190-E2 during its unveil in Sao Jose dos Campos, Brazil, February 25, 2016. REUTERS/Nacho Doce