Achi news desk-
Bombardier on Thursday became the latest airline to reveal an exemption from Canadian sanctions on Russian titanium, as Canada defended its decision to allow partial recovery from recent measures imposed over the war in Ukraine.
On Tuesday, Reuters first reported that Airbus won a waiver from Canada’s new ban on Russian titanium, weeks after Ottawa added supplier VSMPO-AVISMA to a list of banned entities due to alleged ties to Russia’s military-industrial complex.
Canada has become the first Western government to ban Russian supplies of the strategic metal as part of a package to mark the second anniversary of Russia’s invasion of Ukraine in February.
VSMPO has been an essential supplier of titanium for years, which is valued for its strength relative to its weight.
Traditional customers included most Western aircraft manufacturers including Bombardier at a time when it was developing the CSeries passenger jet, which it sold to Airbus in 2018.
Now a purely business jet maker, Bombardier no longer buys Russian titanium directly. But some of its suppliers do, so the company needed an exception, CEO Eric Martel said during a quarterly results presentation.
“We worked with the government and we also worked with our entire supplier base to make sure we were doing the right thing. But at the same time we needed to make sure you know we’re still running our factories,” he told reporters.
Canada’s decision to row back on part of the limited-time ban has been criticized by Ukraine’s ambassador to Canada, who called Airbus’ omission on Wednesday a “disruption.”
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The Ukrainian Canadian Congress on Wednesday urged Justin Trudeau’s government to enforce its sanctions policy.
Speaking to reporters Thursday, Foreign Affairs Minister Melanie Joly defended the surrender decisions and said Canadian jobs were the deciding factor.
“We will always make sure that we put maximum pressure on the Russian regime and in the meantime protect our jobs here at home. We can do that together,” he said.
Two sources familiar with the matter said Canada’s decision to impose sanctions surprised other Western aerospace nations and prompted behind-the-scenes talks between Ottawa and various capitals.
Canada’s foreign ministry says it has made it clear to companies that they must find other sources of titanium.
Exemptions announced so far apply only to the aerospace sector, including the military, said a Canadian source with direct knowledge of the matter.
The exemption is only available for a limited time, said the source, who asked not to be identified given the sensitivity of the matter.
Airbus has repeatedly argued that banning Russian titanium would harm the aerospace industry while barely hurting Moscow.
In Europe, CEO Guillaume Faury said Airbus and others secured Canadian approval “to continue to find the small amount of titanium that we still need.”
“Western industry has reduced its exposure very significantly but there is a certain flow of titanium coming and that enables a very large industry,” Faury told reporters.
“The major Western aviation countries have followed a different path that matches our needs and beliefs and we expect and hope to continue to be understood,” he added.
Asked if he was concerned about the apparent break in Western unity over the titanium sanctions policy, Faury said: “I don’t see it as a rupture of unity… but more as a way for the Canadians to deal with the situation.”
The titanium row overshadowed a strong set of orders that pushed shares in Bombardier up 9% on Thursday.
Orders for its jets rose 60% in the first quarter, pushing the company’s backlog to $14.9 billion.
But like others in the supply-pressed industry, Bombardier burned through more cash than expected after boosting inventory to support increased production.
“Although we continue to need more working capital investment in the near term, we will be well positioned in the second half of the year and well beyond,” Martel told analysts.
The company is ramping up production this year of its super midsize Challenger jets that seat around 10 and will expand manufacturing of its Global large-cabin aircraft in 2024.
It faces a challenge from Gulfstream, its rival General Dynamics, which began taking delivery of its G700 flagship luxury jet certified last month.
Bombardier reported 20 deliveries in the first quarter, down from 22 a year earlier but said it remained on track to deliver 150-155 jets this year. Revenue fell 12% due to a supply mix in favor of Challengers which are priced below the Globals.
