Embraer president Mauricio Botelho has confirmed that the company is on course for a share flotation on international markets later this year, raising cash for new product development, but also underlining the Brazilian manufacturer's ambitions to increase its world presence.

Botelho, speaking at the show, said that it is too early to discuss the size of the initial public offering (IPO), but he confirms that the company is likely to seek listings in New York and London, as well as on the Brazilian exchange, early in the second half of this year.

The company was privatised in 1994 and is now largely owned by local and foreign investment funds, with a small strategic stake reserved by the Brazilian Government. Embraer made a successful foray into the US bond markets to raise $70 million last May and the offer was taken up in only three days.

Work is already in hand to complete the tidying up of the company's books ready for the IPO. Botelho says that the 1997 accounts, to be presented in March, will include a $100 million write off against the EMB-120 Brasilia 30-seat turboprop. The charge covers the remaining development costs against the 12 year old programme, which is now running at only one aircraft a month, although that could double in the wake of the Sky West order for 20 aircraft.

Despite the charge and the cost of a production ramp-up for the ERJ-145 50 seat regional jet in the first half of the year, the company is still expected to come close to breakeven for 1997. Operating profits are understood to be around $270 million on sales of more than $760 million. The company plans to invest some $500 million over the next five years, of which around $100 million will go on production efficiency measures, including increased automation.

The remainder of the spending is outlined for product work, including the $100 million development of the ERJ-135 37 seat derivative of the ERJ-145. The aircraft is now due for roll out in May, with first delivery due in July 1999.

Production plans call for regional jet output to rise from 4.5 ERJ-145s a month to a combined total of 10 by mid-1999 as the ERJ-135 starts to come on line. Botelho says that Embraer is prepared for a maximum of 132 aircraft a year to be turned out on the dual assembly line.

He is cautious, however, over the timing of any 70 seater programme, saying that the company will wait to see what impact the arrival of the Boeing 717 will have on the top end of the regional jet market. "We think there is a market for the 70 seater, but it is very close to the 100 seat market," he says.

Botelho adds that Embraer is still "actively interested" in finding a partner to help it expand. He does not rule out renewed talks with the Aero International (Regional) partners, whose own alliance is in the throes of dissolving, but he stresses that the aim is to find an "entrepreneurial" business ally to help give it the backing to increase its global presence and support major airline customers.

Embraer is now conducting an ERJ-145 demonstration tour in Australia, and Botelho says that the company's presence at the Asian Aerospace show is part of a strategy to seed the regional jet market in Asia Pacific, which he believes could begin to develop over the next five years or so.

Source: Flight International