Canadian Sanctions Exempt Bombardier, Airbus on Russian Titanium

Post by: Raman Preet

Photo : Christopher Katsarov/The Canadian Press

Bombardier, on Thursday, emerged as the latest aircraft manufacturer to unveil an exemption from Canadian sanctions regarding Russian titanium, a move defended by Canada amidst its recent measures linked to the conflict in Ukraine.

Earlier reported by Reuters on Tuesday, Airbus had secured a waiver from a fresh Canadian prohibition on Russian titanium, following Ottawa's addition of supplier VSMPO-AVISMA to its list of entities banned over alleged ties to Russia’s military-industrial complex.

Canada's decision to ban Russian supplies of titanium marks a significant move, making it the first Western government to take such action as part of a package commemorating the second anniversary of Russia's Ukraine invasion in February.

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For years, VSMPO has been a crucial supplier of titanium, highly valued for its strength-to-weight ratio, with major Western aircraft manufacturers, including Bombardier during its CSeries development phase (which it sold to Airbus in 2018), relying on its supply.

While Bombardier itself no longer directly purchases Russian titanium, some of its suppliers do, necessitating an exemption, as CEO Eric Martel outlined during a quarterly results presentation, emphasizing the need to maintain operations while adhering to sanctions.

However, Canada's partial reprieve has faced criticism from Ukraine’s ambassador to Canada, while the Ukrainian Canadian Congress has urged Prime Minister Justin Trudeau's government to uphold its sanctions policy.

Foreign Affairs Minister Melanie Joly defended the waiver decisions, citing job protection in Canada as a key factor, amidst discussions with other Western aerospace nations regarding the unexpected imposition of sanctions by Canada.

While Canada insists that companies must seek alternative titanium sources, exemptions thus far have been confined to the aerospace sector, including the military, and are temporary, according to a Canadian source familiar with the matter.

Airbus, in particular, has emphasized the adverse impact of banning Russian titanium on the aerospace industry, although it remains hopeful for continued understanding and cooperation.

Despite the titanium controversy, Bombardier reported a robust set of orders in the first quarter, propelling its shares upward. However, challenges persist, with increased production straining cash flow and competition from rival manufacturers like General Dynamics' Gulfstream.

Nonetheless, Bombardier remains optimistic about its production plans and delivery targets for the year, even as it navigates the complexities of supply chain disruptions and geopolitical tensions affecting the aerospace industry.

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