link/Source: http://atwonline.com/manufacturers/embr ... 35eb13ce7f

Embraer is in discussions with the Brazilian government about the possibility of challenging the Québec provincial government’s $1 billion investment in Bombardier’s CSeries program through the World Trade Organization (WTO), according to Embraer CEO Paulo Cesar Silva.

if I'm not mistaken, I doubt they will be able to win since the Quebec government purchased an equity stake into the cseries & did not subsidize it.

Now should the WTO somehow rule that Quebec's investment constituted as a "subsidy", doesn't BBD have credited retaliatory measures from previous rulings against Embraer that it could claim?

Anyway, who cares about WTO rulings?

1900Driver wrote:

if I'm not mistaken, I doubt they will be able to win since the Quebec government purchased an equity stake into the cseries & did not subsidize it.

An equity stake on terms no private investor would have accepted is a subsidy by another name. Say for example the stake Quebec bought was worth only $300 million to private investors, then Bombardier would have received a $700 million subsidy. WTO rules are well known and it is rarely this obvious, though.

Quebec's investment bought it 49.5% in a new entity comprising all assets and liabilities of the C-series program, with Bombardier owning the rest of the shares. Quebec also received warrants to buy Bombardier Inc stock at a pre-determined price. If the balance sheet of the C-series program plus the warrants amount to $1 billion, Embraer and Brazil will have a hard time making a case at the WTO, simplified as this explanation may be.

What product does Embraer sell that competes with the C-series? Is the E-195 even in the same class?

The Brazil government is the number one investor in the KC-390, which EMB plans to sell for a profit. Without government investment, the aircraft would not be built. Of course, none of that money will siphon over to the civilian side, right?

Good luck with the WTO.

Meh, tell one single aircraft manufacturer who hasn't been subsidized(directly or indirectly) by the taxpayers, some of those subsidies are sometimes somewhat justified due to strategic concerns, e.g. Russia reviving its civilian aircraft industry due to possible sanctions, China in order to develop its own indigenous military and civilian aircraft, Canada to keep jobs and technologies that would otherwise disappear.

Sometimes it doesn't even matter if it's profitable or not, there are always many other things at stake. So basically all aircraft companies are subsidized to some extent, period.

blueflyer wrote:

1900Driver wrote:

if I'm not mistaken, I doubt they will be able to win since the Quebec government purchased an equity stake into the cseries & did not subsidize it.

An equity stake on terms no private investor would have accepted is a subsidy by another name. Say for example the stake Quebec bought was worth only $300 million to private investors, then Bombardier would have received a $700 million subsidy. WTO rules are well known and it is rarely this obvious, though.

Quebec's investment bought it 49.5% in a new entity comprising all assets and liabilities of the C-series program, with Bombardier owning the rest of the shares. Quebec also received warrants to buy Bombardier Inc stock at a pre-determined price. If the balance sheet of the C-series program plus the warrants amount to $1 billion, Embraer and Brazil will have a hard time making a case at the WTO, simplified as this explanation may be.

Exactly! I don't see what case embraer has? I'm astonished by the fact that this company would not even exist had it not been their government aid. Now they insist on being sore losers over losing the lost Delta deal, which was clearly the better decision.

The Brazilian government created Embraer, but they also very nearly destroyed it. Had it not been privatized in the 1990s that company would be history. It's a miracle private investors were able to save the company and still run it in such a difficult country.

It's pretty clear that Canada's involvement in the C-Series has been a breath of life to the program. Attempting to say there is no subsidy at least in effect here is just inaccurate, which is why this is likely to be a tougher case to make at the WTO. But it nonetheless is there.

FYI Brazil also has a WTO victory against BBD, but these retaliatory measures usually go unused from what I understand.

queb wrote:

Anyway, who cares about WTO rulings?

Indeed, all WTO proceedings do is put money into the hands of lawyers and give the politicians even more to flap their gums about.

PPVRA wrote:

The Brazilian government created Embraer, but they also very nearly destroyed it. Had it not been privatized in the 1990s that company would be history. It's a miracle private investors were able to save the company and still run it in such a difficult country.

It's pretty clear that Canada's involvement in the C-Series has been a breath of life to the program. Attempting to say there is no subsidy at least in effect here is just inaccurate, which is why this is likely to be a tougher case to make at the WTO. But it nonetheless is there.

FYI Brazil also has a WTO victory against BBD, but these retaliatory measures usually go unused from what I understand.

There are plenty of medium lift cargo planes available, but the Brazilian military sole sourced Emb to build something all new to support local industry.

Emb is flogging the aircraft built with government money to other customers.....a plane that would not exist without government support.

Mr Kettle....there's a Mr pot on line 3.

JoeCanuck wrote:

PPVRA wrote:

The Brazilian government created Embraer, but they also very nearly destroyed it. Had it not been privatized in the 1990s that company would be history. It's a miracle private investors were able to save the company and still run it in such a difficult country.

It's pretty clear that Canada's involvement in the C-Series has been a breath of life to the program. Attempting to say there is no subsidy at least in effect here is just inaccurate, which is why this is likely to be a tougher case to make at the WTO. But it nonetheless is there.

FYI Brazil also has a WTO victory against BBD, but these retaliatory measures usually go unused from what I understand.

There are plenty of medium lift cargo planes available, but the Brazilian military sole sourced Emb to build something all new to support local industry.

Emb is flogging the aircraft built with government money to other customers.....a plane that would not exist without government support.

Mr Kettle....there's a Mr pot on line 3.

The KC390 is a military program, not a normal market-based offering. It is also being built by a variety of risk-sharing partners and in partnership with other air forces. The Brazilian air force could not afford it on its own.

So? That's just semantics. It's a for profit program paid for, in a large part by the Brazilian dating government.

Canada could paint a cseries grey and call it a sub hunter and voila.....excempt military program which also has civilian applications.

That being said, every aircraft program has some level of subsidy and as long as China and Russia get a free pass, the whole wto thing is a joke.