Brazilian plane maker Embraer is challenging the fairness of Bombardier’s agreement to supply Delta Air Lines with up to 75 CS-100 aircraft for about $5.6 billion.
Embraer is calling out the big subsidies given by the Canadian government, and said it may ask the World Trade Organization to review the subsidies.
"This causes too big of a distortion in the market. We are analyzing the situation, looking for more information and already in talks with the Brazilian government," Embraer head of commercial aviation Paulo Cesar de Souza e Silva said.
Bombardier scored a $1 billion investment from the Quebec government and also expects to gain financial aid from the federal government.
The challenge centered on the huge discounts offered by Bombardier to win the business, which Embraer says is only possible because of state subsidies.
Industry sources report Bombardier gave Delta Airlines approximately 60% discount off the list price for the CS100 planes, but Bombardier denies this.
"Our transactions are all in full compliance with WTO rules. Those Embraer comments are not based on facts. The Delta selection was based on the aircraft’s proven performance," said spokeswoman Bombardier spokeswoman Marianella de la Barrera.
She said the company has not yet received the aid from Quebec and when it does, it will comply with all WTO trade regulations.
