Canada Set to Buy Boeing's Sub-Hunting 737 in Snub to Bombardier

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Canada is poised to order as many as 16 military surveillance aircraft from Boeing Co. in a contract valued at as much as US$6 billion, rejecting a home-grown rival proposed by private-jet manufacturer Bombardier Inc.

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Justin Trudeau’s government will confirm the deal Thursday afternoon, according to a person familiar with the matter who asked not to be named ahead of a formal announcement.

The U.S. State Department has already approved the potential sale of the US Navy’s top sub-hunting aircraft, a modified Boeing 737 commercial jetliner called the P-8 Poseidon. The U.S. Senate must also sign off on the deal to Canada.

The new jets would replace Canada’s aging fleet of Lockheed Martin Corp. CP-140 Aurora aircraft at a time when Russia and China are showing increased interest in the Arctic region. The U.S. has been pushing its close ally to upgrade the technology it is contributing to the North American Aerospace Defense Command, especially after an alleged Chinese spy balloon traveled over both nations before being shot down in February.

Trudeau’s government had previously expressed a preference for the Boeing plane, which is already deployed by Germany, Norway, South Korea, Australia and New Zealand. The deal would be among the largest of its kind for the U.S. planemaker.

The P-8 Poseidon faced a late challenge from Montreal-based Bombardier, with Chief Executive Officer Eric Martel calling for an open and “fair” procurement process as he tries to jump start a new defence business.

Martel touted over the past months a militarized version of Bombardier’s Global 6500 business jet as a “made-in-Canada solution” that would showcase Canada’s defence innovation. The firm partnered with General Dynamics Corp. in May to develop the aircraft’s military equipment.

However, the proposed model exists only on paper, a factor that adds to the risk of delays or other new-aircraft pitfalls on a project important to national security.

To sweeten the deal, Boeing will open a research and development centre in Montreal and create partnerships with Canadian universities, according to the person familiar with the matter.

Canada’s La Presse reported earlier on the contract award.

—With assistance from Laura Dhillon Kane.