Embraer sees chances of Delta order

Reuters News
|
Posted: Jun 20, 2011 11:48 AM
Embraer sees chances of Delta order

By Cesar Bianconi

LE BOURGET, France (Reuters) - Brazilian planemaker Embraer sees "good chances" of firm orders from U.S. carrier Delta Air Lines, which will likely make a decision to renew its fleet by October, a top company executive told Reuters on Monday.

Embraer is competing to win orders from Delta, which will likely buy as many as 100 new regional aircraft to replace its aging fleet. The U.S. carrier could buy a total 400 planes among large, mid-sized and small jets.

"Our expectation is that Delta decides about all this in October ... they are in talks with everyone," Paulo Cesar de Souza e Silva, who heads Embraer's commercial aviation unit, said in an interview at the Paris Air Show.

Silva's comments highlight Embraer's salesforce efforts to defend its market leader position in the regional jet market, which is slowly attracting rivals from China, Russia and Japan. Embraer said earlier in the day that it won orders for 39 E-190 regional jets worth $1.7 billion at list prices at the airshow.

Customers include Air Lease Corp, Air Astana, General Electric, Sriwijaya Air and Kenya Airways, Embraer said. The planemaker predicted demand for 7,225 regional jets in the next 20 years, worth $320 billion.

The world's biggest producer of regional jets is also close to sealing a deal for the sale of six to 10 jets to Republic Airlines, Silva said. Talks with Indonesian airline Garuda could produce a firm order within the next three months, he noted.

Sales announcements are easing worries about Embraer's near-term challenges, which include a strong local currency that drives up production costs, natural disasters and geopolitical tensions around the world that could disrupt deliveries, and a sluggish global economic recovery.

Sao Paulo-traded shares of the company rose slightly on Monday, the second day of gains. Embraer's U.S.-traded stock gained 0.4 percent to $31.82.

Among companies competing for the Delta contract are behemoths Boeing and Airbus, and Canada's Bombardier -- Embraer's archrival in the regional market.

Silva voiced concerns that plans by Airbus and Boeing to ramp up output in coming years could spark a glut of aircraft in global markets.

"Both of them are expecting to deliver 1,000 jets a year. That's a lot," he said.

"If there are disruptions in orders by Malaysia, India, or any global economic problem, it could be bad for the industry as a whole," he added.

(Writing by Guillermo Parra-Bernal, editing by Dave Zimmerman)