Bombardier on Thursday became the latest aircraft maker to unveil a waiver of Canadian sanctions on Russian titanium, as Canada defended its decision to grant a partial reprieve from recent war-imposed measures in Ukraine.
On Tuesday, Reuters first reported that Airbus had obtained an exemption from a new Canadian ban on Russian titanium, weeks after Ottawa added supplier VSMPO-AVISMA to a list of banned entities for alleged ties to the military-industrial complex. From Russia.
Canada is 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 for years been a key supplier of titanium, prized for its strength in relation to its weight.
Traditional customers included most Western aircraft manufacturers, including Bombardier at a time when it was developing the CSeries airliner, which it sold to Airbus in 2018.
Bombardier, now purely a manufacturer of business jets, no longer directly purchases Russian titanium. But some of its suppliers do, so the company needed an exemption, CEO Eric Martel said during a quarterly results presentation.
“We worked with the government and also our entire supplier base to make sure we were doing the right thing. But at the same time we needed to make sure that we continue to operate our factories,” he told reporters.
Canada’s decision to back off part of the ban for a limited period has been criticized by Ukraine’s ambassador to Canada, who on Wednesday called the Airbus exemption “disturbing.”
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The Ukrainian Canadian Congress on Wednesday urged Justin Trudeau’s government to enforce its sanctions policy.
Speaking to reporters on Thursday, Foreign Minister Melanie Joly defended the waiver decisions and said jobs in Canada had been the deciding factor.
“We will always ensure that we put maximum pressure on the Russian regime and in the meantime protect our jobs here at home. “We can do it together,” she said.
Two sources familiar with the matter said Canada’s decision to impose sanctions took other Western aerospace nations by surprise and sparked behind-the-scenes discussions between Ottawa and several capitals.
Canada’s Foreign Affairs Ministry says it has made it clear to companies that they must find other sources of titanium.
The exemptions issued so far apply only to the aerospace sector, including the military, said a Canadian source with direct knowledge of the matter.
The exemption is available only for a limited time, said the source, who requested anonymity given the sensitivity of the matter.
Airbus has repeatedly argued that banning Russian titanium would hurt the aerospace industry and do little harm to Moscow.
In Europe, CEO Guillaume Faury said Airbus and others had obtained Canadian approvals “to continue sourcing the small amount of titanium that we still need.”
“The Western industry has significantly decreased its exposure, but there is still a certain flow of titanium that is coming in that allows for a very large industry,” Faury told reporters.
“The other major Western aviation countries have taken a different route that suits our needs and beliefs and we hope we continue to be understood,” he added.
Asked if he was concerned about the apparent breakdown of Western unity over the titanium sanctions policy, Faury said: “I don’t see it as a breakdown of unity… but rather as a way for Canadians to confront the situation”.
The titanium dispute overshadowed a strong series of orders that sent Bombardier shares up 9% on Thursday.
Orders for its aircraft increased 60% in the first quarter, raising the company’s order book to $14.9 billion.
But like others in the industry with limited supply, Bombardier burned more cash than expected after increasing inventory to support increased production.
“While we continue to need more working capital investments 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 of its super-midsize Challenger jets with seating for about 10 people this year and will expand manufacturing of its large-cabin Global jet in 2024.
It faces a challenge from rival General Dynamics’ Gulfstream, which is starting deliveries of its flagship G700 luxury jet, which was certified last month.
Bombardier reported 20 deliveries in the first quarter, down from 22 a year earlier, but said it remains on track to deliver between 150 and 155 aircraft this year. Revenue fell 12% due to a delivery mix that favors Challengers that are priced lower than Globals.