Tuesday, March 24, 2009

Brazil's Embraer sells 24 combat planes to Ecuador

In another instance of South-South Cooperation, Brazil and Ecuador have just concluded a deal which makes Ecuador the proud owner of 24 Super Tucano combat planes.

The total cost of these 24 planes is unknown (Embaer did not comment), but we do know that Colombia paid $234.5 million usd for 25. The price is probably somewhere in that range, give or take a few million $'s thanks to fluctuating input costs and the typical Latin American favoritism.

Super Tucano combat planes fying in formation

The Super Tucano according to this article from the Latin American Herald is a turbo-prop, multi-purpose aircraft which is capable of carrying variety of conventional and smart weapons.

Ecuador has ordered the two-seat version of the plane in order to be able to also use it as a training air craft. Officials had the following to say.

“We’re very honored to expand our relationship with the government of Ecuador, a country that operates different models of Embraer aircraft,” the firm’s executive vice president for defense products, Orlando Jose Ferreira Neto, said in a statement announcing the deal.

“The Super Tucano is the ideal aircraft to execute patrol and training missions, and we are sure that it will fully meet the needs of the Ecuadorian air force,” he added.

Financially, Embaer like much of the rest of the Airline Industry (see this article from the Straits Times) has felt the pinch of the global down turn especially hard. Everything from orders of military craft to private jets are down. Overall depressing and continued negative market sentiment doesn't exactly help too much either.

The stock is down a lot, but as one of Brazil's prize jewels of innovation, success and EMPLOYMENT... Embaer is not going anywhere. The company has $1.2 billion usd in debt, BUT thankfully it also has $1.62 billion usd in cash sitting on the side lines.

This will both allow Embraer to make good on its debt obligations, keep its working paid to prevent civil unrest at production sites in Brazil and ultimately this emerging market company will emerge a little bit higher on the food chain of the new global economy.

Embraer (ERJ) - 2 year