(Adds quotes, comments on WTO)
By Allison Lampert
MONTREAL, Feb 7 (Reuters) - Canada's federal government on Tuesday announced C$372.5 million ($283 million) in repayable loans for two of Bombardier Inc's BBDb.TO jet programs, promising to defend the deal against a potential trade challenge by Brazil.
While the aid was far less than the $1 billion originally sought by the Canadian plane and train maker, Bombardier Chief Executive Officer Alain Bellemare called it the right level of support, saying the company's financial situation has improved.
The loans, which come from a Canadian aerospace and defense fund targeting research and development projects, will be used for Bombardier's new CSeries jet and the Global 7000 business jet, the government said.
The contributions will be provided over four years with the majority allocated to the Global 7000 program.
The move risks reopening trade wounds with rival jetmaking nation Brazil, which has threatened to take Canada to the World Trade Organization over what it says is unfair support for Bombardier.
Asked about the potential ramifications of the new aid, Canada Trade Minister Francois-Philippe Champagne said, "We'll fight that wherever we need to fight that."
"I'm very much prepared to defend what we're doing," Champagne added, noting that other countries support their aerospace sectors.
Bombardier initially asked Canada to match a $1 billion injection in the CSeries program from the province of Quebec in 2016. But negotiations dragged on for more than a year as the Liberals made requests of the company, such as changes to its dual class governing structure.
Quebec's spending in the CSeries, along with a separate $1.5 billion investment by the province's largest pension fund in Bombardier's rail division, already risked triggering a trade feud between the company and rival Brazilian planemaker Embraer SA EMBR3.SA .
Brazil's foreign ministry in December authorized World Trade Organization proceedings against Canada over Bombardier's roughly $5.4 billion CSeries jetliner program, which competes with some Embraer jets as well as the smallest products of plane giants Boeing (NYSE:BA) Co BA.N and Airbus Group SE AIR.PA .
Reimbursable loans are a key pillar of the world's largest trade dispute, involving mutual transatlantic claims of unfair support for aircraft makers Airbus and Boeing.
The WTO found that government loans used by European Union member states to support Airbus airplane developments constituted unfair subsidies, prompting the threat of U.S. sanctions. But, after more than a decade, the case has yet to complete lengthy WTO legal and compliance processes. ($1 = C$1.3182)