Business Irish

Wednesday 15 August 2018

Top Irish aviation boss slams Bombardier's 'unfair' support

Embraer’s Irish boss John Slattery says the Brazilian firm is still quantifying the financial hit from alleged Bombardier subsidies. Photo: Bloomberg
Embraer’s Irish boss John Slattery says the Brazilian firm is still quantifying the financial hit from alleged Bombardier subsidies. Photo: Bloomberg
John Mulligan

John Mulligan

Brazilian jet maker Embraer is not interested in "killing" Bombardier, but wants it to behave like a "normal commercial enterprise", its commercial aviation CEO John Slattery has said.

The World Trade Organisation (WTO) opened a panel last week - the initial stage of dispute resolution - after Brazil became the latest country to complain about alleged subsidies Canada has provided to Bombardier which is Embraer's biggest rival in the global regional jet market.

Last week, the US Department of Commerce delivered a preliminary ruling following a separate complaint made by Boeing against Bombardier.

Boeing claimed that the Canadian company had been able to sell dozens of its C-Series jets to US airline Delta at below cost because it had received subsidies.

Bombardier denied the claim, but has been hit with a 220pc levy on sales of C-Series jets into the United States.

The ruling has caused a political and commercial rupture between Canada and the United States, as well as between the UK and the US.

Bombardier employs more than 4,000 people at four plants in Belfast, where fuselages and wings are made.

About 1,000 of the Northern Ireland jobs are directly involved in making wings for the C-Series jets.

"I don't want to sink anybody," Mr Slattery told the Irish Independent.

"There's room for everybody. I've no interest in killing Bombardier. It's not in our DNA. All we want is a level playing field, where they behave like a normal commercial enterprise."

He added: "As an Irishman, I paid attention to what was being said about the jobs in Belfast. But we're not trying to put anyone out of business.

"If they can keep going back to their government for equity or for loans, when the rest of the commercial market is closed to them for equity or debt, then that's unfair by anybody's sensible and sober calculus."

Mr Slattery said he believes the US preliminary ruling "validates" Brazil's position at the WTO, which Embraer is supporting.

"People need to understand clearly what we're talking about here," he said. "We're talking about a situation where subsidies from a Sovereign have found their way into a commercial enterprise.

"Because of those subsidies, that commercial enterprise has been able to sell their wares at a discount to their cost of goods.

"They were only able to do that because they had the confidence the equity was coming from the Sovereign to back the shareholders' equity on the right-hand side of the balance sheet."

He added: "Canada is a G7 nation. We're a small, private enterprise in Brazil selling to customers around the world. We do not have the capability to compete with a G7 sovereign nation."

Mr Slattery pointed out that Embraer is a publicly-quoted company on the New York stock exchange.

"If we can't get capital, we're out of business. That's the nature of successful commercial enterprises," he said.

Embraer is the leading global seller of regional jets with between 70 and 130 seats. Its commercial aviation division generated sales last year of $3.5bn (€3bn) and delivered 108 jets.

Bombardier's commercial aviation revenue last year was $2.6bn and it delivered 86 jets.

"We are not looking in any way, shape or form to stifle competition or to stifle innovation. Nothing could be further from the truth," Mr Slattery insisted.

He added that the level of the financial hit taken by Embraer as a result of the alleged subsidies received by Bombardier is still being assessed.

"It's something we're discussing at the WTO, but it's significant."

Business group ISME has called for the European Union to weigh in on the dispute between Boeing and Bombardier.

Minister for Foreign Affairs Simon Coveney has also said that he will raise concerns the dispute could have on Northern Ireland's peace process when he meets US Commerce Secretary and former Bank of Ireland shareholder Wilbur Ross in Washington DC this week.

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