There is a long-standing history of disputes between Embraer in Brazil and Bombardier in Canada over state subsidies, so it is perhaps no surprise that Embraer has questioned the sale of 75 Bombardier C-Series jets to Delta Airlines in a hotly contested market sector in which Embraer is represented by their E-Jets.
The head of Embraer’s commercial aviation unit, Paulo Cesar Silva, believes that government financing has given Bombardier an unfair advantage in the deal with Delta and that Embraer may challenge it at the World Trade Organisation (WTO). Speaking to Reuters, Silva indicated that “The WTO is an alternative,” to resolve this present trade dispute, adding that: “Another channel could be government-to-government talks. That might be the best way to avoid a dispute.”
Embraer has already been in contact with the Brazilian government, but according to Silva they are unable to take any further action until they have more evidence of the figures involved in the sale to Delta. Currently the C-Series section of Bombardier is looking to receive delayed funds of US$1 billion from the province of Quebec, while they are also waiting for the result of an approach to the Canadian federal government for a further US$1 billion.
Though the company has yet to receive any money from Quebec, it is believed that the investment from allowed Bombardier to sell the 75 planes to Delta at a figure some analysts believe was at a 66% discount off book price for the C100 of US$71.8 million. Those close to Bombardier have strenuously denied this.
Silva commented further that “Given the support, Bombardier has been very aggressive, to the point of offering planes at prices below their production costs. That’s what the numbers show.
“It causes a major distortion in the market. We’re not competing with a private enterprise any more. We’re competing with the government,” he said, adding “And the one footing the bill is the Canadian taxpayer.”
Bombardier spokeswoman, Marianella de la Barrera, is confirmed as saying that “Our transactions are all in full compliance with WTO rules. Those comments (by Silva) are not based on facts. The (Delta Airlines) selection was based on the aircraft’s proven performance.”
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