Embraer welcomes Brazil’s regional airline stimulus plan

Washington DC
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The Brazilian government's proposal to invest Brazilian real (R$) 7.3 billion ($3.72 billion) on regional airline services could provide a boost to Embraer's order book over the long-term, says chief executive Frederico Curado.

In December, Brazil's president Dilma Rouseff unveiled the stimulus package aimed at helping to restore services to the country's mostly abandoned small and medium-sized airports, as part of a wider infrastructure investment plan called Programme for Investment in Logistics.

The programme has been opened to public debate in January and February, but Curado expects the government to push through a final proposal in the near future.

"I think they're going to implement it very soon," Curado says.

The plan comes as welcome news for Embraer. The Brazilian airframer sees few sales opportunities outside the US market for its portfolio of large regional jets.

No major orders by Brazil's regional and domestic airlines are expected to materialise in the short-term, however.

First, the goal of the plan is to stimulate traffic at regional airports throughout Brazil, incentivising domestic airlines to restore or increase services outside the major cities. Over the past two decades, the number of operating commercial airports has decreased from about 250 to 300, to about 150, Curado says.

"The government announced the desire to fly commercial flights into cities that have no service today and foster economic development," Curado says.

Rouseff's plan calls for upgrading 270 regional airports throughout the country, including 67 in the north, 64 in the fast-growing northeast, 31 in the midwest, 65 in the southeast and 43 in the south. The $3.72 billion fund will invest in new runways and improvements to passenger terminals. The account also directly subsidises airlines for launching service between small and medium-sized airports.