Brazilian aircraft maker Embraer S.A (ERJ) recently sold six 190 Jets to GE Capital Aviation Services (GECAS), the commercial aircraft leasing and financing arm of General Electric.
The sale agreement also includes an option for another six aircraft, valued at $256.8 million at list prices. However, if GECAS exercises the option the deal may reach $500 million. The delivery of the first aircraft is scheduled for the fourth quarter of 2012.
GECAS is committed toward continuous fleet renewal programs to meet their evolving requirements. The worldwide demand for Embraer’s E-Jet carriers is anticipated to add operational and financial flexibility of leasing to the fleets of GECAS, thereby ensuring growth and strengthening their regional base.
GECAS presently has 93 E-Jets of all models on lease with 15 airlines around the world. GECAS ordered two E-Jets, at the Paris Air Show in June this year, that are now contracted for lease to a South American carrier.
Since entering service in 2005, Embraer has delivered 436 E190/195 E-Jets to more than 60 airline customers. The key feature of the E-Jets family is state-of-the-art, fly-by-wire technology, which increases operating safety, reduces pilot workload and fuel consumption besides providing a maximum cruise speed of Mach 0.82.
The E-Jet aircrafts also provides savings in terms of crew training and costs of spare parts and maintenance of the carriers. The portfolio extension program undertaken by GECAS, the long-standing customer and partner of Embraer looks conducive toward the company’s customer base expansion through the extensive global network.
GECAS, the U.S. and Irish commercial aircraft financing and leasing business of GE, has a fleet of over 1,750 owned and managed aircraft with approximately 245 airlines in 75 countries.
Embraer S.A designs, manufactures and sells aircraft and aviation-related structural parts to the world’s commercial aviation, executive aviation and defense markets. The company’s product portfolio supporting strong customer orders and diversified global footprint, gives a tough competition to its peers, such as Boeing Co. (BA), Lockheed Martin Corporation (LMT), Northrop Grumman Corporation (NOC), etc.
The company presently retains a short-term Zacks #2 Rank (Buy) that corresponds with our long-term Outperform recommendation on the stock.
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