China Orders 13 ERJ Jets

Brazil's commercial planemaker, Embraer S.A (ERJ - Analyst Report) recently received order for 13 Legacy 650 executive jets from Minsheng Financial Leasing Co, China. The first aircraft is scheduled to be delivered by the end of this year, with the remainder expected to be delivered within the next five years.

Embraer has not yet received any permission to produce its popular E-Jet family of regional planes in the rapidly growing market in China, as it involves the risk of giving tight competition to the Asian country, developing similar plane. Hence, Embraer strategically reached a deal in April to start assembling smaller business jets in China focusing on the country’s aviation market. In this backdrop, the new order of Legacy 650 executive jets marked a significant advancement in terms of partnership between the two companies, strengthening Embraer’s business development in the strong and promising Chinese executive aviation market.

Minsheng Financial Leasing Co., Ltd. (MSFL), established in April 2008, is one of the first five financial leasing companies approved by the China Banking Regulatory Commission (CBRC). Embraer signed a memorandum of understanding with Minsheng in July for up to 20 business aircrafts, from entry level to ultra-large executive jets, thereby enhancing strategic cooperation between the two companies.

The Legacy 650 is a new addition to Embraer’s executive jets family, which started operating in late 2010. The key features of this new jet include a flying range of 3,900 nautical miles (7,223 kilometers), carrying four passengers, under NBAA IFR conditions, continuously from Beijing to Dubai, Hong Kong to Adelaide, or from Dubai to London. Moreover, the aircraft includes the highly integrated Honeywell Primus Elite avionics suite, targeted to reduce pilot workload and enhance flight safety. The state-of-the-art sound insulation package helps to reduce cabin noise.

The Legacy 650 also offers three comfortable cabin zones, which can carry up to 14 passengers in a spacious area. The jet has a fully equipped wet galley and the largest in-flight accessible baggage compartment. This ideal business class jet helps easy transfer of large files, video streaming using Wi-Fi technology while supporting call making and receiving via VoIP as well.

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 - Analyst Report), Lockheed Martin Corporation (LMT - Analyst Report), Northrop Grumman Corporation (NOC - Analyst Report), 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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