MONTREAL — Deteriorating relations between Canada and Russia over the Ukrainian crisis will delay for at least a year a tentative joint venture Bombardier Inc. signed last year with Russian firm Rostec to build aircraft jointly there, Russian business daily Vedomosti reported Tuesday.

The likely postponement places in serious jeopardy a US$3.4 billion deal, signed with Rostekhnologii (Rostec) on August 28, 2013, for up to 100 Bombardier Q400 turboprop aircraft.

The final agreement was to have been signed this year, and the aircraft sale is conditional on Bombardier building a production plant in Ulyanovsk, about 900 kilometres east of Moscow.

Bombardier Aerospace spokeswoman Marianella de la Barrera said that her company is “still committed” to finalizing an accord this year.

“However, considering there are only three months left before the end of the year, we are being realistic and it could take a little longer than that. The timeline could shift. But we are in active discussions and we are still committed.”

“We have not been notified that there is any change.”

Vedomosti did not quote any Rostec official.

As The Gazette noted when it disclosed the pending agreement in June, before the August signing, Rostec, a sprawling defence and aerospace giant, is headed by Sergei Chemezov.

Now an oligarch, Chemezov is an ex-KGB agent and a close colleague and friend of Russian President Vladimir Putin since the 1980s. The two spies worked together in Dresden before German reunification, and Chemezov’s fortunes rose along with those of his friend. The two remain close by all accounts.

Chemezov is a target of U.S. sanctions by the U.S. as “a trusted ally” of Putin’s and the postponement could be seen as payback for Canada’s solidarity with the U.S. and Ottawa’s vocal criticism of Russian actions in Ukraine.

De la Barrera said Rostec has not notified Bombardier of any delay.

“I haven’t seen any press release or communiqué.”

She could not say when the last communications with Rostec took place and declined to characterize the tone of discussions between the two firms.

“It’s a sensitive time there and we’re monitoring developments very closely,” de la Barrera said.

Cameron Doerksen, an analyst with Montreal brokerage National Bank Financial, said it is not surprising that the joint venture in Russia is not moving forward “as long as the political situation in Russia is what it is.”

“If it had happened, obviously it would have been an upside for Bombardier, but it was probably not going to be material over the next 12 months.”

In the meantime Bombardier has signed up other customers for the Q400, Doerksen added.

“It’s still certainly possible that at some time in the future, this thing may still happen. But I don’t think that investors’ expectation was that there were going to be aircraft built in Russia any time soon.”

Even if a deal were struck today, he noted, it would be at least 18 months before airplanes started rolling off a production line.

fshalom@montrealgazette.com



