Honeywell Suffers Court Defeat in Canada in Fight With Bombardier

Aircraft maker Bombardier Inc. won a significant victory in a legal tussle with Honeywell International Inc. over the cost of engines the Canadian company purchased for business jets.

A Superior Court judge in the province of Quebec ruled that Honeywell has an obligation to negotiate with Bombardier on potential cost reductions for an engine system used in the latter’s Challenger jet line. The judge also ordered Honeywell to disclose a range of customer information, sales records and other documents to an independent expert.

Bombardier is seeking hundreds of millions of dollars in the case, arguing that it paid too much for HTF7000 turbofan engines.

The roots of the dispute go back to the 1990s, when Bombardier began developing a so-called “super midsize” private jet with a longer range, capable of carrying passengers non-stop across North America.

Honeywell initially developed and manufactured the HTF7000 engines solely for Bombardier, but later began selling similar engines to Bombardier rivals Gulfstream Aerospace Corp., Embraer SA and Textron Inc., according to the court judgment released last month.

Two sections of the contracts state that Honeywell must work to increase engine performance for Bombardier while reducing costs, and that the Canadian company should always get the best price.

Bombardier claims it has good reason to believe Honeywell sold its engines at a lower price to other customers.

“With the arrival of competitors, Bombardier’s relationship with Honeywell became strained,” wrote Justice David R. Collier of the Superior Court of Quebec.

Bombardier claims C$447 million ($331 million) in damages from Honeywell for what it believes it overpaid between 2012 and 2017, in addition to an undetermined amount of compensation for engines it bought the years after. The court hasn’t ruled on liability or damages.

Honeywell is appealing the decision, company spokesperson Caitlin Leopold said in an email. The request was made on Jan. 11, and the Court of Appeal of Quebec has stayed Collier’s judgment for now.

Bombardier is contesting the motion to appeal, spokesperson Mark Masluch said, adding that it “will continue to pursue the matter, seeking appropriate compensation per the contracts in question.”

Top photo: A Honeywell office in Atlanta, Georgia, US, on Wednesday, Oct. 25, 2023. Honeywell International Inc. released earnings figures on October 26. Photographer: Elijah Nouvelage/Bloomberg