Northwest Airlines is expected to decide soon on a new regional jet, ahead of a critical ruling by the World Trade Organisation (WTO) over the dispute between Bombardier and Embraer on the use of state subsidies to sell competing aircraft.

The US carrier is looking to order up to 51 new aircraft to replace Northwest Airlink carrier Express Airlines I's fleet of 36 Saab 340 and 10 British Aerospace Jetstream 31s. A decision between the 50-seat Bombardier CRJ200 and the competing Embraer RJ-145 and smaller 37-seat ERJ-135 is imminent, say industry sources.

A major consideration in the timing of Northwest's announcement could be the final report by the WTO's two dispute settlement panels that are examining the long-running battle over use of Brazil's PROEX export financing and Bombardier's use of Canadian development aid to discount aircraft pricing. A ruling is due by 5 March (Flight International, 9-15 December).

Embraer president Mauricio Botelho says: "The real issue is the amount of subsidies the Canadian Government provides to its industry compared with what the Brazilian Government provides. The answer is clear - Canadian subsidies represent a discount in price at present value of something like $5.5-$6.6 million, while PROEX benefits may represent a maximum of $2.5 million."

Northwest is the last major US carrier to decide on a new regional jet to replace its turboprops. Continental Express and American Eagle have, respectively, ordered 100 and and 117 ERJ-135/145s. United Airlines, Delta Air Lines and US Airways have favoured CRJs.

"We've been able to design, develop and manufacture an aircraft that weighs 2t less than the Canadian competitor aircraft, costs less to acquire and less to operate-and we have smaller subsidies," says Botelho. "Canada does not accept this."

Continental Express, which has just taken delivery of the 100th ERJ-145 production aircraft, rules out any retrospective increase in the pricing of undelivered orders in the event of a WTO ruling going against Embraer.

Continental Express president David Siegel, defending Embraer, adds: "We looked at both aircraft and financing assistance and we preferred the Embraer jet and we preferred Bombardier financing. Faced by that decision, we went with the better aeroplane."

Source: Flight International