UPDATE 2-Embraer eyes WTO challenge to Bombardier state funding

(Adds reaction from Bombardier, estimate of price for CSeries
paid by Delta Airlines)
By Brad Haynes
SAO PAULO, May 16 (Reuters) - Brazilian planemaker Embraer
SA EMBR3.SA may challenge the state funding received by
Canadian rival Bombardier Inc BBDb.TO at the World Trade
Organization (WTO), a senior executive told Reuters on Monday.
Paulo Cesar Silva, the head of Embraer's commercial aviation
unit, said in a telephone interview that favorable government
financing has given Bombardier an unfair advantage in sales
campaigns where its new CSeries is up against Embraer's E-Jets.
"The WTO is an alternative" to resolve the potential trade
dispute, Silva said. "Another channel could be
government-to-government talks. That might be the best way to
avoid a dispute."
Embraer has reached out to the Brazilian government, but
still needs details of Bombardier's financing arrangements
before taking action, Silva added.
Brazil and Canada have locked horns repeatedly at the WTO
over the past two decades regarding state support for Embraer
and Bombardier, the world's biggest commercial planemakers after
powerhouses Boeing (NYSE:BA) Co BA.N and Airbus Group AIR.PA .
Bombardier secured $1 billion for its C Series program from
the Quebec government last year and has asked Canada's federal
government to match the investment.
Embraer's concerns about the funding boiled over last month
when Bombardier won an aggressive bid for 75 aircraft for U.S.
carrier Delta Air Lines Inc (NYSE:DAL).
Several industry sources have pegged the discount close to
two-thirds off the nominal CS100 list price of $71.8 million,
but people close to Bombardier have denied this.
"Given the support, Bombardier has been very aggressive, to
the point of offering planes at prices below their production
costs. That's what the numbers show," Silva said.
"It causes a major distortion in the market. We're not
competing with a private enterprise any more. We're competing
with the government," he said. "And the one footing the bill is
the Canadian taxpayer."
A spokeswoman for Bombardier commercial aircraft said Monday
the Delta deal complies with WTO guidelines.
"Our transactions are all in full compliance with WTO
rules," spokeswoman Marianella de la Barrera said by phone from
Toronto. "Those comments (from Embraer) are not based on facts.
The (Delta) selection was based on the aircraft's proven
performance."
De la Barrera added that while Bombardier was given a
commitment from the Quebec government, the company has not
received any cash from the province because the deal has not yet
been finalized.