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UPDATE 4-Canada offers support for aerospace as election looms

·3 min read

* Canada, Quebec pledge up to C$693 mln for aerospace projects

* CAE, Pratt & Whitney Canada, and Textron to benefit

* Minister says also in talks with Airbus, Bombardier on support

* Move to support jobs comes ahead of fall federal election (Adds comment from Airbus)

By Allison Lampert

MONTREAL, July 15 (Reuters) - Canada and Quebec are ready to spend a combined C$693 million ($550 million) on aerospace projects that cut carbon emissions, Prime Minister Justin Trudeau said on Thursday, a boost for high-tech jobs ahead of an expected fall federal election.

The total will be shared between training specialist CAE Inc , the Canadian unit of U.S. engine maker Pratt & Whitney , and Textron, the parent company of Bell Helicopter.

When in-house company spending is added, the total rises to more than C$1.8 billion, officials said.

Speaking in Montreal, Trudeau said the move would create and maintain 12,000 jobs in the province of Quebec. That province accounts for almost a quarter of the seats in the House of Commons and is crucial to his hopes of retaining power.

Confirmation of support came after Reuters reported Canada would "co-invest" with Pratt to bring a hybrid turboprop engine to first flight as part of wider aerospace funding.

"There is fierce global competition to see who will develop the next cleaner aircraft or the next technology which will revolutionize the sector," Trudeau told reporters.

Canada's Innovation Minister François-Philippe Champagne said the federal government is talking with other companies operating in the country's aerospace hub Quebec, including Europe's Airbus SE and Bombardier Inc.

"We still have a lot of runway in order to support the industry," he told Reuters in an interview.

"We're in discussions certainly with Airbus. We're in discussions with Bombardier. We're in discussions with a number of companies ... to see how we can support them."

Airbus confirmed in an emailed statement that it is in discussion with Canada on 'different avenues of potential cooperation.'

TRADE TENSIONS

Airbus bought the Canadian-developed CSeries jet program from Bombardier in 2018 and renamed it A220. Bombardier continues to build business jets.

A Bombardier spokesman confirmed federal talks, saying the company planned significant investments in reducing emissions. Airbus did not immediately reply to a request for comment.

Canada's federal government pledged up to C$440 million for the projects as part of Thursday's package.

Aviation has been battered by the COVID-19 crisis and some companies like Airbus have complained that Canada's support did not go as far as help seen elsewhere.

Aerospace manufacturers worldwide regularly tap their governments for various types of support, making the sector a lightning rod for global trade tensions.

Canada's pledge is among the first measures since Brazil dropped a complaint over aerospace subsidies against Canada, and the United States and Europe called a truce in their own 17-year aircraft trade war - both earlier this year.

Any fresh investment is likely to be scrutinized by Canada's traditional rival, Brazil, and the United States, which has clashed with Canada and Europe over aerospace in the past.

All four trade powers have won partial victories at the World Trade Organization in aircraft disputes stretching back as far as 1996, though U.S. planemaker Boeing failed to win a separate case brought against Bombardier directly.

Champagne said the funding measures announced on Thursday would all be partially repayable, but declined to give details.

"We are confident that the investments we are making today (are in) full compliance with the trade rules," Champagne said.

($1 = 1.2596 Canadian dollars) (Reporting by Allison Lampert in Montreal and David Ljunggren in Ottawa; Additional reporting by Tim Hepher in Paris and Anirudh Saligrama in Bengaluru; Editing by Franklin Paul, Steve Orlofsky, David Gregorio, and Sherry Jacob-Phillips)