February 7, 2017 / 10:29 PM / 2 years ago

Canada to announce C$372 million aid to Bombardier: source

MONTREAL (Reuters) - The Canadian government will announce an aid package for Bombardier Inc (BBDb.TO) later on Tuesday, although a source familiar with the matter said the amount would be far less than the plane-maker had requested.

A plane flies over a Bombardier plant in Montreal, January 21, 2014. REUTERS/Christinne Muschi

The assistance from the government could trigger a new trade dispute with Brazil, which said late last year it would start proceedings against Canada at the World Trade Organization over what it calls unfair support.

Bombardier and Brazil’s Embraer SA (EMBR3.SA) have battled for decades over the regional jet market.

The source said Canadian Innovation Minister Navdeep Bains would announce that Ottawa was giving the firm C$372 million ($282.27 million) in repayable loans.

French-language public broadcaster Radio-Canada said just one-third of the amount would go to Bombardier’s new C-Series passenger jet, with the rest going to the Global 7000 business jet.

In late 2015, Bombardier asked the federal government to inject $1 billion into the C-Series. Negotiations dragged on for more than a year as Cabinet ministers outlined concessions they wanted the firm to make, such as changing its dual-class governing structure.

Government officials declined to comment when asked about the report. Bombardier is now in a better position financially than when it initially asked Ottawa to match $1 billion in aid from the province of Quebec, where Bombardier is headquartered.

The CSeries jetliner program competes with some airliners made by Embraer, as well as the smallest products of plane giants Boeing Co (BA.N) and Airbus Group SE. (AIR.PA)

Reimbursable loans are a key pillar of the world’s largest trade dispute, involving mutual transatlantic claims of unfair support for aircraft makers Airbus and Boeing.

Canada’s trade minister said last month he had told Brazil he was open to resolving a feud over funding for Bombardier without turning to the World Trade Organization.

($1 = 1.3179 Canadian dollars)

Additional reporting by Leah Schnurr and David Ljunggren in Ottawa; Editing by Dan Grebler and Peter Cooney

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