Embraer is exploring new partnerships for the KC-390 military transport after Boeing terminated its joint-venture agreement with the Brazilian company in April.
The airframer remains positive about the international prospects for the aircraft, despite losing the sales network of the aerospace giant and a potential entry point into the US military market, it said in a first-quarter 2020 earnings call on 1 June.
“The original business plan for the [KC-390] did not include countries such as the US, for example. So the market perspective remains positive for the [KC-390],” says Francisco Gomes Neto, chief executive of Embraer.
“And of course, I mean here we also have opportunities for future partnerships. But at this moment, we are still in the process to evaluate alternatives and possible business models.”
Gomes Neto does not name potential collaborators on the KC-390, though China and India have been mentioned as possible partners for the company’s commercial aviation division. Partnerships with companies in those Asian countries could open huge regional airliner markets for the manufacturer’s E-Jets.
However, linking the production or sale of the KC-390 to China or India could be tricky given fraught geopolitics. In particular, increasing Western hostility towards Beijing amid the coronavirus crisis and rivalry with the USA might make such a deal difficult.
The USA remains an important market for the Sierra Nevada/Embraer A-29 Super Tucano light-attack aircraft. Washington also has the ability to issue financial sanctions against countries who buy aircraft from nations it does not like, a tool it has used to hurt sales of Russian military aircraft.
Nonetheless, partnering with a company with strategic ties to a foreign government could help sales of the KC-390 as deals for military aircraft often are influenced by local politics.
For example, the first international customer for the KC-390 was Portugal, a country with strong historical ties to Brazil and with industrial participation in the programme. Embraer says it started production of the first of Lisbon’s five jets in late 2019.
The company has five KC-390s at different stages of production. It anticipates delivering two more examples to the Brazilian air force by the end of 2020, in line with its first-quarter projections. In 2019, the company delivered two KC-390s to Brasilia.
Embraer’s defence and security business unit generated $149 million in revenue in the first quarter of 2020, a 16.9% decline compared to the same period a year earlier.
The company’s financial performance across all its divisions, including military, commercial airliner, business jet and service units, fell 23% in the first quarter, to $634 million.