Estonian Air wins legal debate with Bombardier

Photo: Priit Simson

The Ontario Superior Court of Justice in Canada ruled on May 24 in favor of Estonian Air in the carrier's debate with the Canadian aircraft manufacturer Bombardier, the daily Postimees reports.

"The case is closed. The ruling proved that the company was in the right from the start, we won the case," Estonian Air CEO Jan Palmer told the paper on Monday.

Palmer said he does not know what the lawsuit cost the company as he needs to add up the expenses first.

"The Canadian aircraft manufacturer Bombardier claimed that the majority shareholder in Estonian Air [i.e., the Estonian government] had influenced the carrier's business decisions to the detriment of Bombardier. The Canadian court found the claims made in the lawsuit to be not true and thus the case against the majority shareholder has been closed," spokeswoman for Estonian Air Ilona Eskelinen said in a comment.

"We are very positively minded about the Canadian court's ruling and hope the process will find a final resolution soon. Bombardier is one of our most important partners and cooperation with them continues," she added.

The exact size of Bombardier's claim against the Estonian state and Estonian Air is not known. The airline paid around eight million euros for getting rid of two superfluous Embraer planes, the paper observes.

The national carrier entered in mid-2011 into negotiations with Bombardier to buy five new aircraft. The financing of the purchase was to be arranged by the government of Canada, not Estonia, the ruling notes. Talks over financing were held with Canada's state export promoting agency Export Development Canada (EDC).

In November 2011 Bombardier and Estonian Air entered into a contract for the sale and purchase of five CRJ900 planes. At some point during October-November Estonian Air's then chief executive Tero Taskila told Bombardier's director of international sales Robert Baseggio that the Brazilian aircraft manufacturer Embraer was lobbying the Estonian government and had made a competitive bid to sell aircraft to Estonian Air. The carrier ultimately canceled the order of aircraft from Bombardier.

Bombardier's position was that the government interfered with Estonian Air's decision-making and forced the airline to switch to one-fleet-type solution as a result of which the carrier withdrew from the contract with the Canadian manufacturer and purchased five aircraft from Embraer instead. Two of those never arrived in Estonia as the government changed Estonian Air's strategy again last year.

The Ontario Superior Court found that the Estonian government in no way interfered with Estonian Air's purchase decision and ruled in favor of the Estonian side.