Embraer (ERJ) Reduces the Number of Orders With the Brazilian Air Force for the Largest Military Aircraft Built in Brazil

Embraer (ERJ) Reduces the Number of Orders With the Brazilian Air Force for the Largest Military Aircraft Built in Brazil

 

Embraer S.A. (NYSE: ERJ) hereby updates the information disclosed in the Notice to the Market on November 12, 2021 regarding the Contracts 002/DCTA-COPAC/2014 and 10/DCTA-COPAC/2014, entered into in 2014 among the Brazilian Federal Government, Embraer and one of its subsidiaries (“Contracts”).

 

After the disclosure of the afore mentioned Notice to the Market, Embraer and the Brazilian Air Force engaged in intense discussions on the subject, the complexity of which required a large number of meetings with the participation of various representatives of both parties.

 

The successful negotiation process resulted in the execution of amendments to the Contracts to, among other matters:

 

1 – Reduce from 28 to 22 the total number of KC-390 Millennium aircraft to be delivered under the terms of the Contracts with the Brazilian Air Force (FAB), with deliveries scheduled until 2034;

2 – Adjust other contractual clauses as compensation for the reduction mentioned in the previous item to mitigate the impacts for the Embraer.

 

The Embraer Management estimates that the result of the negotiations reflected in the amendments to the Contracts will generate a reduction in the backlog of approximately US$500 million. Such amendments may result in an immediate impact on Embraer's operating results of up to US$50 million and will be reflected in the 2021 Financial Statements, with no immediate effect on the Embraer cash account. We emphasize that the impacts in 2021 do not compromise the achievement of the guidance disclosed by the Embraer for the year 2021.

 

The new production rate is in line with FAB's budgetary conditions while allowing Embraer to better plan for the long term with its suppliers.

 

The benefits of the KC-390 program are not limited to operational gains for the entire national defense system, but also represent an important increase in exports of high value-added products, contributing to the country's trade balance - the aircraft has already been ordered by Portugal and Hungary, two nations that are part of NATO.

 

The KC-390 is capable of performing a variety of missions, including humanitarian support, aeromedical evacuation, search and rescue, carrying and dropping cargo and troops, and in-flight refueling. With unique innovations in its category, the aircraft has been successfully used in FAB humanitarian missions both in Brazil, in the fight against the Covid-19 pandemic, and abroad, in support of disasters in Lebanon and Haiti.

 

Finally, Embraer reiterates its role as a strategic partner of the Brazilian Air Force in the development and implementation of high value-added technological solutions and products, a partnership established more than 50 years ago.

 

*NOTE:

The aviation news website MAIS QUE VOAR (MORE THAN FLY) does not agree with Fakenews. This publication contains content with sources from  I.R. Embraer press.