Bombardier's appeal for Canadian government financing support as it builds the business case for a new 100-seat jet has had the unintended effect of reopening the export subsidies dispute with Embraer. In a twist, the latest flare-up is the result of a basic factual dispute, rather than mutual accusations of improper government-aided financing.

In a 17 February speech, Bombardier chief executive Paul Tellier urged the Canadian government to increase the level of Export Development Corporation (EDC) financing for regional aircraft deliveries from the recent average of around 40%, arguing that Brazil's development bank BNDES has financed "over 80%" of Embraer's regional jet sales over the past three years.

Embraer responded by publishing figures showing that BNDES financing support for its regional jet sales averaged 61%, using Bombardier's calculation, with a one-year high of 85% in 2002. This is less than Tellier claimed, but above the 41% of Bombardier regional aircraft deliveries that he says were financed by EDC in the past three years. Embraer says BNDES financing totalled $1 billion last year, not the $1.8 billion claimed by Bombardier.

It is unclear if the dispute will shatter the nine-month-old truce on the subsidies issue. Embraer has launched an attack on Bombardier's desire to raise government financing support to back the C$2 billion ($1.5 billion) development of a new 100- to 120-seat jet, arguing that the $1 billion development cost of the 170/190 family was raised privately.

Bombardier, meanwhile, has signalled the seriousness of its deliberations into launching a 100-seat-plus jet by appointing the former leader of Boeing's 737/757 division, Gary Scott, to head its new commercial aircraft programme. Scott was most recently president of CAE's civil simulation and training division and was a leading candidate to succeed CAE chief executive Derek Burney when he retires later this year.

Bombardier is expected to decide on the new aircraft within 14 months, with development likely to take up to five years. Tellier says Bombardier's corporate office will be "deeply involved" in deciding whether the company should launch a new family of aircraft. Local reports say Scott could emerge as leading candidate to replace Bombardier Aerospace president Pierre Beaudoin if he succeeds Tellier.


Source: Flight International