The British government is providing financing to help Bombardier Inc. sell C Series aircraft to a key Asian airline, just weeks after a U.S. trade agency rejected allegations the Canadian company was receiving unfair state subsidies.
UK Export Finance, a government agency that assists British exporters, is providing financing to Korean Air Lines Co. Ltd. to support the sale of two CS300 aircraft. Bombardier signed a deal in 2011 with Korean Air for the purchase of 10 CS300s, with an option for another 10 and purchase rights for 10 more. One plane was delivered last December and another one is expected to be in service this year. UK Export Finance is working with Export Development Canada on the financing arrangements and both are expected to provide assistance for more deliveries. It's not clear how much support is being offered but the list price for a CS300 plane is nearly US$90-million.
Montreal-based Bombardier is a significant employer in Northern Ireland with about 4,000 workers at plants in Belfast, including a major operation that makes wings for the C Series. While the British government has provided around £135-million ($240-million) worth of loans to the Northern Ireland plants over the years, this is the first time UK Export has been involved in backing a sale of C Series airplanes.
The financing also comes after months of intense lobbying by the Canadian and British governments last year to prevent the U.S. Department of Commerce from imposing duties of nearly 300 per cent on imports of C Series planes. The move was prompted by U.S. giant Boeing Co., which alleged Bombardier received massive state subsidies from Canada and Britain, allowing Bombardier to sell the planes in the United States at absurdly low prices. To cope with the possible duties, Bombardier struck a deal with Airbus Group SE last fall which acquired a 50.01-per-cent ownership stake in the C Series program for no cash, and incorporated the plane into its product lineup. The objective was to circumvent any U.S. tariffs by using an Airbus plant in Alabama to assemble C Series planes. However, in January, the U.S. International Trade Commission rejected Boeing's claim and called off the duties.
"The U.K. is at the forefront of the civil aerospace industry and I am delighted that the Department for International Trade is backing this landmark contract, which will support the global success of Bombardier's C Series program and its operations in Northern Ireland," said Rona Fairhead, the Britain's Minister of State for Trade and Export Promotion at the Department for International Trade.
Added Michael Ryan, president of Bombardier Aerostructures and Engineering Services: "We are very proud to have secured our first C Series aircraft sale to an Asian airline, and with the backing of UK Export Finance and Export Development Canada, look forward to building on this success."