New Brazil subsidies could spur E-Jet sales: Embraer

Washington DC
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Proposed Brazilian subsidies for regional airlines could spark a new wave of orders for Embraer commercial jets next year, says chief executive Frederico Curado.

“We should be able to sell aircraft not only to Azul but to other regional airlines,” Curado says in a second quarter earnings call with analysts on 31 July.

Curado cautions that some of the proposals announced by Brazil’s executive branch last week need to be ratified by Congress.

“We’ll have to see how fast Congress passes those pieces of legislation,” Curado says.

The programme would be funded with $450 million (R1 billion) annually and subsidise 50% of the capacity on aircraft up to 120 seats assigned to routes serving Brazil’s regional airports.

Brazil is also investing $3.22 billion to modernise about 270 regional airports.

Curado described the programme as restoring Brazil’s former regional air transportation network, which once connected up to 300 cities with commercial service.

“The number [of regional airports served] today is less than 50%,” Curado says. “The airports are out there but nobody is flying to them.”

The programme comes at a key time in Embraer’s commercial aviation strategy.

The E-Jet E2 family is on track to enter service in 2018, leaving Embraer with at least 3.5 years of backlog to fill with firm orders of the current generation of regional airliners.

Curado says Embraer also has multiple sales campaigns “literally all over the world”.