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Russia threatens end of US$3.4b Canadian aircraft deal

Moscow is considering ending its US$3.4 billion contract with Canadian manufacturer Bombardier to build Q400 planes and the construction of an assembly factory in Russia, its minister of industry said.

MOSCOW: Moscow is considering ending its US$3.4 billion contract with Canadian manufacturer Bombardier to build Q400 planes and the construction of an assembly factory in Russia, its minister of industry said on Thursday.

The head of Bombardier's aviation arm, Guy Hachey, in March hinted that the deal concluded in August 2013 with Russia's state-backed Rostec was threatened by Canadian sanctions against Russia.

Sanctions imposed by Canada against several Russian officials for their role in the Ukraine crisis "softened up a little bit the discussions", Hachey was quoted as saying.

"Regarding the Bombardier Q400, independent of the political situation... is the question of whether to continue or end the project," Denis Matourov told Russian media agency Ria Novosti on the sidelines of the Saint Petersburg International Economic Forum on Thursday.

"We have reviewed the question of price with Rostec, given that the one put forward by the Canadian party today is high," he said.

The head of state-owned Rostec, Sergey Chemezov, said the negotiations are still under way.

The West has imposed sanctions on Russia and is threatening more over its role in fomenting unrest in eastern Ukraine after Moscow annexed the Black Sea peninsula of Crimea.

Last summer Bombardier signed a letter of intent with Rostec laying out plans to open a joint production unit for the Q400 NextGen aircraft in the Ulyanovsk region on the Volga.

The deal also included the sale of up to 100 Q400 Turboprop planes valued at US$3.4 billion (2.5 billion euros).

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