Embraer hopes to increase the share of turnover contributed by the military side of its business to 30% within five years, although it says a long-term aim of achieving a 50:50 split between defence and commercial activities is unlikely due to the runaway success of its regional jet family.

The Brazilian manufacturer regards building its military side as important because of the contribution required from the division in terms of technology transfer. Defence division projects account for around 10-15% of total turnover, although in the early years of Embraer - founded in 1969 - the division was roughly equal.

Embraer chief executive Mauricio Botelho expects military revenues to have increased significantly by 2004, when a planned upgrade of the Brazilian air force's Northrop F-5 fighter should kick in. "We would like to have a 30% contribution from defence in five years, but we probably won't reach parity because of the success of the commercial side," he says.

Embraer says the F-5 retrofit, to be undertaken with Israel's Elbit, "is definitely going ahead", despite budget worries. Upgraded aircraft should be delivered from 2003 and will have a lifespan of 10-15 years, to 2018. Brazil has 45 aircraft but may acquire more.

In the long-term, Brazil must replace its F-5s and 18 Dassault Mirage IIIs and Embraer expects work on a new fighter - designated the AFX - to make the biggest single military contribution to the bottom line over the next few decades. "We'd like to undertake a lot of the high value work in Brazil," says senior manager for defence market strategy, Anastacio Katsanos.

More immediately, Embraer says production of the Alenia/ Embraer AMX will continue for about two years, and it is looking to its new ALX Super Tucano, EMB-145SA airborne early warning and control platform and EMB-145RS remote sensing variant to take over the military baton. The manufacturer has high export hopes for the -145SA, and is considering a maritime patrol version of the RS.

A project to adapt the ERJ-135 as a corporate jet is, meanwhile, in the feasibility phase, and is regarded as defence work because a launch order would almost certainly come from the Brazilian Government. The ALX has 99 orders from Brazil, and Embraer hopes for up to 200 export orders, largely from other South American countries.

Source: Flight International