Aviation

Embraer delivers 17 Commercial and 27 Executive Jets in 3Q19

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São José dos Campos, Brazil, October 31, 2019 – Embraer (NYSE: ERJ; B3: EMBR3;) delivered a total of 44 jets in the third quarter of 2019 (3Q19), of which 17 were commercial aircraft and 27 were executive jets (15 light and 12 large). As of September 30^th, the firm order backlog totaled USD 16.2 billion.

In the beginning of 3Q19, Embraer signed a contract with SkyWest, Inc. for a firm order of seven E175 jets in a 70-seat configuration. SkyWest will operate the aircraft for Delta. The order has a value of USD 340 million, based on 2019 list prices, and was already included in Embraer’s 2019 second-quarter backlog as an “undisclosed” customer. Deliveries are expected to begin in the fourth quarter of 2019.

In the third quarter, Embraer also delivered its first E195-E2, the largest of the three members of the E-Jets E2 family of commercial aircraft. The recipients were AerCap, the world’s largest aircraft leasing company, and Azul Linhas Aéreas Brasileiras. Azul is the global launch operator for the E195-E2 and had placed firm orders for 51 of the type. The airline will receive another five aircraft in 2019.

In the Executive Jets segment, Embraer announced a purchase agreement with Flexjet, a global leader in private jet travel, for a fleet of Praetor 500, Praetor 600 and Phenom 300 jets. The announcement was made during the 2019 National Business Aviation Association’s Business Aviation Convention and Exhibition (NBAA-BACE), in Las Vegas, Nevada. Valued at up to USD 1.4 billion, at current list prices, this deal was included in the 2019 second quarter backlog, with deliveries starting in the fourth quarter of 2019.

Also, the new Praetor 500 midsize business jet was granted the Type Certificate from three regulatory authorities: ANAC, the Brazilian Civil Aviation Agency (Agência Nacional de Aviação Civil); the FAA (U.S. Federal Aviation Administration), and EASA (European Aviation Safety Agency). Embraer has already received orders for the Praetor 500, including in Brazil. Also, Embraer delivered a Praetor 600 to its first Brazilian customer in 3Q19. In the Defense & Security segment, the Portuguese Government announced a firm order of five multi-mission Embraer KC-390 airlifters, representing the entry of the aircraft into the international market. The contract, which was signed at Embraer’s facility in Évora, Portugal, also includes services and support and a flight simulator as part of the process to modernize Portuguese Air Force capabilities to support national Armed Forces operations and increase readiness in missions of public interest. Deliveries are scheduled to start in 2023. This contract will be included in Embraer’s backlog in the fourth quarter of 2019.

Aviation

Aeroflot Buys Used Planes for Spare Parts Amid Sanctions

In the face of ongoing Western sanctions that have severely impacted Russia’s aviation industry, Aeroflot, the country’s largest airline, has devised a strategic plan to bolster its fleet’s spare parts inventory.

The airline is set to acquire five Boeing 737-800BCF freighters from Atran Airlines, a move that will allow it to dismantle the aircraft for critical components. The planes, which will be transferred to Aeroflot’s low-cost subsidiary Pobeda, will not be converted into passenger jets but instead will be stripped for valuable parts to support existing operations.

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Aeroflot’s plan to purchase these Boeing 737-800BCF freighters comes as part of a broader strategy to mitigate the effects of Western sanctions, which have crippled the Russian aviation sector. With the sanctions restricting access to essential aircraft parts and spare components, Aeroflot is exploring alternative ways to maintain and repair its fleet.

Instead of converting the freighters from cargo to passenger planes, a process deemed “unreasonably expensive” under current sanctions, the airline intends to focus on extracting high-value components such as engines, landing gear, avionics, and other essential systems.

The deal will be structured in a way that allows Aeroflot to indirectly purchase the freighters through an insurance settlement with the aircraft’s lessor, AerCap.

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The Russian government’s insurance company will reimburse the aircraft’s value, and the planes will then be leased back to local operators. This method circumvents some of the restrictions imposed by international sanctions while ensuring that the airline gains access to the necessary components to support its fleet.

By dismantling the aircraft for spare parts, Aeroflot aims to secure critical resources for the ongoing maintenance of its existing fleet. Components from the Boeing 737-800BCF freighters, such as engines and avionics, are expected to be reused in other aircraft within Aeroflot’s network, ensuring that the airline can keep its operations running smoothly