February 8, 2017 / 6:41 PM / a year ago

UPDATE 2-Canada open to more aid for future Bombardier planes -source

(Adds comments from airline executive, industry analyst)

By David Ljunggren and Allison Lampert

OTTAWA/MONTREAL, Feb 8 (Reuters) - The Canadian government would be open to providing more aid to planemaker Bombardier Inc if it developed new aircraft and asked for help, a source familiar with the matter told Reuters on Wednesday.

Ottawa announced C$372.5 million ($282 million) in repayable loans for two Bombardier jet programs on Tuesday but the funding fell short of the $1 billion the firm had initially requested in late 2015.

The source declined to be identified as the discussions were confidential.

Brazil, home to rival plane maker Embraer SA, on Wednesday opened a formal complaint against Canada at the World Trade Organization over its subsidies for Bombardier.

Canada’s Liberal government says Bombardier is a crucial part of the high-tech sector.

“If they develop a different program, they may well make an application for funding, and the government would have to look at that,” said the source, who added: “What they’ll need in five years’ time, no one knows.”

Although some trade lawyers have suggested Brazil’s challenge could deter potential customers, U.S. regional carrier Mesa Air Group Inc said on Wednesday it would continue buying Bombardier planes.

“We’ve been doing business with them for a long time,” Chief Executive Officer Jonathan Ornstein said. “This is not going to change anything.”

Morningstar analyst Chris Higgins said the C$372.5 million would not go very far, given that even modest upgrades to existing planes can cost several hundred million dollars.

“However, this isn’t late 2015 when Bombardier needed a large cash infusion, and the money also comes with very few strings attached,” he wrote in a note to clients.

Bombardier first asked for a $1 billion injection into its new CSeries jet, prompting Prime Minister Justin Trudeau’s team to demand a better deal.

At one point, government negotiators pressed the firm to change its dual share-class structure, which gives majority control to the Bombardier-Beaudoin family. The company dismissed the idea.

The source indicated Ottawa would no longer make similar demands, saying: “It is not the business of the government to tell companies to change their share structure.”

The source said the latest package relied on funds in an existing aerospace fund rather than requiring the government - which is racking up large budget deficits - to spend more.

Asked how Ottawa had decided to give precisely C$372.5 million, the source said: “That is what was available in the program for the next four years. There’s no magic to it.”

($1=$1.32 Canadian)

Reporting by David Ljunggren; Editing by Denny Thomas, Nick Zieminski and Lisa Shumaker

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