Embraer Challenges Fairchild Dornier

Embraer, which has been in a protracted war of words with Canada and Montreal-based Bombardier over alleged subsidies of the two countries' respective aircraft industries, is now challenging Germany for its support of Fairchild Dornier.

Embraer, Brazil's largest exporter, says it's asking the Government of Brazil to investigate reports that the German and Bavarian governments are planning to provide $345 million in loan guarantees to Fairchild-Dornier. Fairchild-Dornier's 728 and 928 regional jets compete with Embraer's EMB 170, 175, 190, and 195 series aircraft.

"This kind of government assistance is fundamentally unfair," said Embraer external relations VP Henrique Rzezinski. "We are constantly being told by the developed countries that we must rely on the market and not on subsidies," he said.

"Yet we are constantly being faced with concrete evidence that some of these countries do not practice what they preach," Rzezinski said. "They do not leave their aircraft manufacturers to fend for themselves in the market."

A World Trade Organization panel, Embraer says, ruled in July 2001 that a Brazilian export support program known as PROEX "meets all WTO requirements." Canada, says the Brazilian airframer, has been "unable to provide the panel with any evidence that Brazil had applied PROEX in an illegal manner."