Investors and analysts welcomed with enthusiasm the new agreements announced by Embraer at the Paris Airshow on Wednesday, including a significant order of jets by SkyWest Airlines and a defense deal with Lithuania.
The announcements drove Embraer’s shares up by as much as 5%, making it the best performer on the Ibovespa index for the day and highlighting the company’s positive momentum in sales.
Bouncing Back
Embraer had a rocky start at Le Bourget on Monday after Polish airline LOT, a long-time operator of the E-Jet series, chose Airbus’s regional jet A220 over Embraer’s E2 models following a fierce competition for a 40-aircraft contract.
However, the Brazilian company bounced back on Wednesday with a firm order of 60 E175 jets from American SkyWest Airlines, valued at $3.6 billion, which includes options for an additional 50 jets.
The value is based on the list price of the aircraft, according to Embraer, and the order will be included in the company’s second-quarter backlog.
The deal
The deal was described as a “mega order” by Embraer’s President of Commercial Aviation, Arjan Meijer, who stated in a press release that the E175 is the “backbone of regional aviation in North America.”
Santander analysts classified the business as a “highly positive development” for Embraer, emphasizing the significant boost to the order backlog and the signals of ongoing demand for first-generation models in an important region.
Additionally, Embraer announced that South Africa’s Airlink intends to lease 10 second-generation E195-E2 jets from leasing company Azorra, a move that, according to Itaú BBA analysts, could lead to future orders from the American leasing company.
NATO IMPACT
In the defense sector, Lithuania chose Embraer’s C-390 Millennium cargo aircraft as its next-generation military transport plane, paving the way for the acquisition of three aircraft. Financial details were not disclosed.
Analysts said the decision could lead to further orders from European NATO countries, as Portugal, Hungary, and the Netherlands have also selected the aircraft, which competes with Lockheed Martin’s C-130.
“We see potential for at least 50 new orders of the C-390 from NATO countries with increased defense investments in Europe,” Bradesco BBI said in a note to clients.
As the third-largest aircraft manufacturer globally, trailing behind Airbus and Boeing, Embraer has been reaping the benefits of strong demand for its jets. Its shares have risen by 30% this year and soared over 150% last year, reflecting the company’s robust market position and investor confidence.
