Embraer, the Shining Star of Developing World

  • Bindiya Thomas
  • 06:33 PM, April 9, 2013
  • 2194
Embraer, the Shining Star of Developing World
Brazilian aerospace giant, Embraer, has emerged as one of the worlds leading aircraft-makers despite the odds which include: a troubled economy and a lack of military-industrial base. In early 2012, Embraer missed earnings expectations in reporting first-quarter profit of 35 cents per ADS, and said that its order backlog had slipped to $14.7 billion, the lowest level since 2006, from the prior quarter's $15.4 billion. Despite that, the company emerged as number three in the regional jet market beating near-term turbulence and gaining long-term opportunity. The same year, Embraer won a much-coveted border surveillance contract from the Brazilian army, formed a joint venture to manage satellite construction projects and simultaneously posted a 24% increase in annual revenues, topping $1 billion in defence and security sales for the first time in the company's history. Embraers most noted wins abroad include the USAFs Light Air Support (LAS) contract worth $427 million in which Embraer and partner Sierra Nevada will jointly deliver 20 A-29 Super Tucano aircraft to be used by Afghan forces. Earlier this year, Honeywell and Embraer signed an agreement worth $2.8 billion over its lifetime to provide Honeywell's Primus Epic as the integrated avionics system for Embraer's new second generation of the E-Jet aircraft family. The second generation of Embraer E-Jets equipped with Honeywell's Primus Epic is planned to enter service in 2018, with the program expected to launch later this year. In February, Embraer S.A. and AgustaWestland, announced an MoU aimed at establishing a JV for Brazilian AW helicopter production, which will be marketed in Brazil and Latin America for commercial and military purposes. Frederico Fleury Curado, Embraer President and CEO, called this an important step for business expansion, adding that, “The merging of skills and competencies by the two entities will be a great value-add for customers in the region." Embraer is now focused on executing on the SISFRON programme. It has only received the phase-one award, but the overall programme is valued at $4 billion during the next decade. The system is going to create a network of border surveillance stations, with ground-based radars, UAV sensors and command and control systems networked together to identify and catch smugglers crossing the open border, according to reports. By 2020, the company expects the KC-390 and light attack aircraft to account for 43% of the defence company's overall revenues with the fighter modernisation programmes and the P-99 and R-99 production lines to be gone. Meanwhile, revenues generated by several new business product lines, featuring Embraer as a border surveillance integrator, satellite construction manager, unmanned aerial vehicle maker and possibly even a shipbuilder, will contribute 42% of sales by the same point, according to its projections.