Aircraft manufacturer has signed a $3.26 billion contract with the Brazilian government to mass produce the freighter KC -390. The $3.26 billion deal was hailed by President Dilma, who attended the ceremony accompanied by governor Geraldo Alckmin and Defense Minister Celso Amorim. "This agreement is strategic and shows that as of now we have better conditions to transform the KC -390 in a product that will be sold in all parts of the world," stated President Dilma.
May 20, 2014 at 2:08PM
GAVIÃO PEIXOTO São Paulo (Reuters) – Brazil's Embraer SA, the world's biggest maker of regional jets, signed a contract to supply 28 KC-390 cargo aircraft to Brazil's Air Force, according to a statement on Tuesday.
The deal, worth 7.2 billion reais ($3.26 billion), will enter the planemaker's firm order book after final paperwork is completed, which should occur within 90 days, according to a company statement. The deal includes logistic support, spare parts and maintenance.
According to Embraer, deliveries of the KC -390 the government will begin in late 2016 and will extend for 10 years.
"This agreement signed here today ... is strategic for Embraer ... as showing the horizon in which the company will develop," said President Dilma Rousseff in a speech at the opening ceremony of the hangar of the future assembly line the aircraft.
"It also shows that as of now we have better conditions to transform the KC -390 in a product that will be sold in all parts of the world," she added.
The KC -390 is a joint project of Embraer and the Brazilian Air Force (FAB) signed in 2009. On top of the FAB demand, there are 32 aircraft purchase requests from Argentina, Colombia, Chile, Portugal and the Czech Republic.
Shortly after the announcement of the contract with the Brazilian government, Embraer shares accelerated high in the São Paulo trading. At 1:18PM, the company’s shares rose 1.88 percent to 18.97 reais.
Embraer sees a potential market of over 700 KC- 390 type freighters over the next ten years. Thiswould amount to 50 billion dollars.
The KC -390 is the largest aircraft ever developed and manufactured in Brazil. The vessel represents an important diversification of revenue for Embraer, which has sought to expand the weight of executive aviation, and defense in an effort to soften the impact of the sharp fluctuations in the commercial aviation industry.
Embraer designed the KC-390 to replace FAB’s current fleet of Lockheed Martin Corp's storied Hercules C-130 series of airlifters.
The first flights of the KC -390 are scheduled for later this year.
In her speech, Rousseff stressed the importance of the partnership between FAB and Embraer to the country. She claimed it to be "fundamental" to Brazil. The president highlighted the specialized jobs that will be generated with the production of the aircraft.
According to Rousseff, generating quality employment is the greatest motivation for such industry stimulating policies.
"We will produce more than airplanes here, we will produce growth with more jobs, better jobs," stated Rouseff.
(Reporting by Roberta Vilas Boas)