) has recently signed an agreement with the national carrier of
Azerbaijan, Azerbaijan Airlines (AZAL), for the delivery of four
EMBRAER 190s jets; expected to start in the third quarter of
2013. The total value of the deal is estimated around US$180.8
million, to be included in the fourth quarter 2012 backlog for
Embraer is also engaged in another contract with AZAL,
according to which, the latter will purchase two pre-owned
EMBRAER 170s from Embraer's wholly-owned subsidiary, ECC leasing.
Among the two newly purchased E170 jets, the first is to be
delivered in the second quarter of 2013.
The agreement with AZAL will increase the growth potential of
Embraer in Europe, which the company believes is a strong region
where it can help the existing airlines to renew their fleet as
well as increase the routes.
With AZAL, Embraer has reached a level of 25 E-Jet customers
in Europe, including AeroSvit, Air Astana, Air Moldova, Belavia,
Bulgaria Air, Dniproavia, Estonian Air, LOT Polish, and
In a separate release, the company communicated its market
outlook for China Regional Aviation Market. The company expects
roughly 1,005 new 61 to 120-seat jet to be delivered in China by
2031. These deliveries will include roughly 455 deliveries of 61
to 90-seat jets and 550 of 91 to 120-seat jets. The number is
based on the company's analysis involving how the above mentioned
jets replace the existing fleet, lowering risks and devising new
routes of travel.
Embraer currently holds 77% of the Chinese Aviation market
share, which includes a delivery of 120 commercial jets. The
company analysis points out that the market will move with the
policies formulated by the central and local government in the
region as well as fleet optimization measures taken by the
We currently maintain a Neutral recommendation on Embraer. The
stock also bears a Zacks #3 Rank, implying a short-term (1-3
months) Hold rating. The company's major competitors
Lockheed Martin Corporation
Northrop Grumman Corporation
) also have a Zacks #3 (Hold) Rank.
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EMBRAER AIR-ADR (ERJ): Free Stock Analysis
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