Embraer's Induction in Bangladesh

Embraer S.A. (ERJ - Analyst Report) launched its operation base in Bangladesh, with the official unveiling of two Embraer jets – ERJ 145 by a Bangladesh based airline, NovoAir. This airline provides aviation services for both cargo transportation and leisure travel.

ERJ 145 is a regional jet with a capacity of 50 passengers. The jets will fly only domestic routes, including Dhaka and Chittagong in the first year of operation. Second year onwards the network will be broadened to include certain regional and international routes.

The jet was initially launched by Embraer in the year 1996, as a part of the ERJ 145 Regional Jet family. The motive of the launch was to address the growing demand among regional airlines for medium-range, jet-powered aircraft that offered more speed, comfort and capacity than a turboprop.

Embraer faces a stiff competition from other industry players. Recently, in early December 2012, the company lost an important contract from Delta Airlines for forty 50-seater ERJ 145 jets along with an option of 30 more jets in the future, to one of the rivals, Bombardier Inc. This was seen as a major blow to the company’s future performance, leading to a downward revision of estimates by many firms.

Subsequent to the introduction of ERJ 145 in Bangladesh, the products from Embraer will now be used by 85 airlines in 51 countries around the world.

The stock bears a Zacks Rank #3 (Strong Sell). The company’s major competitors Boeing Co. (BA - Analyst Report), Lockheed Martin Corporation (LMT - Analyst Report) and Northrop Grumman Corporation (NOC - Analyst Report) also have a Zacks Rank #3 (Hold).