Brazilian company Embraer anticipates new contracts for its defense aircraft in the Middle East, including through government-to-government agreements, following the historic order of C-390 military aircraft by the United Arab Emirates, the head of its defense division said on Monday.
Bosco da Costa Junior, director of the company’s defense branch, told Reuters that the agreement for up to 20 C-390 military transport aircraft with the UAE – the twelfth country to select this aircraft – positions the Brazilian manufacturer for future sales to its allies.
“The Middle East is a strategic region for us,” he said, emphasizing that Embraer is promoting the C-390 and the Super Tucano light attack aircraft in the area.
Costa Junior highlighted what he referred to as a “differentiated” contract with the UAE for 10 C-390 aircraft with 10 options – marking the first time that this model has been chosen by a Middle Eastern buyer.
“I don’t think these 10 options were included in the contract just for show,” he said. “I believe we will see government-to-government mechanisms here… a nation facilitating the entry of other countries into the C-390 operators club,” he added, without naming potential buyers.
Government-to-government acquisitions have been crucial for C-390 sales in Europe, with Sweden joining an agreement led by the Netherlands, while Portugal secured purchase options for orders placed by other European NATO member countries.
Embraer’s stock rose by 2.5% following the announcement of the UAE agreement, outperforming the Brazilian benchmark index Ibovespa, which fell by 0.9%. Itau BBA analysts estimated the firm order value at $1 billion.
AGING FLEETS
In the Middle East, Embraer campaigned to replace Lockheed Martin’s aging C-130 fleet in Saudi Arabia, but CEO Francisco Gomes Neto indicated to Reuters earlier this year that the prospects of an order from that country had diminished.
The UAE currently operates both the C-130 and Boeing’s C-17.
Costa Junior pointed out that current global conflicts do not directly accelerate sales, but they enhance governments’ focus on operating costs and asset availability, thus motivating fleet renewal decisions.
Embraer estimates global demand for 400 to 480 aircraft in the military transport segment over the next 20 years, mainly to replace obsolete fleets, with around 260 aircraft worldwide approaching or exceeding 45 years of service.
“These aircraft will need to be replaced,” he concluded, adding that the C-390 is preferred to operate in any region.
