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Embraer SA (ERJ - Analyst Report) has entered into a contract with Austral Lineas Aereas for the delivery of two EMBRAER 190 jets. Austral Lineas Aereas, commonly known as Austral, is a subsidiary of Aerolineas Argentina Group.

The new E190s are the Advanced Range version with 96 seats in a two-class layout featuring a modern onboard entertainment system equipped with individual monitors. The E-190 is a stretched version of E-170/175 models. It features a new, larger wing, larger horizontal stabilizer, landing gear structures and a new engine. The GE CF34-10E engines used in E190 have been developed by a unit of General Electric (GE - Analyst Report).

The Embraer E-Jet family is a series of narrow-body, medium-range, twin-engine jet airliners. Since 2004, Embraer has delivered more than 900 E-Jets. The customers of Embraer use the E-jets either as network carriers, as charter operators or as low cost and regional airlines. E-jets help the airlines in balancing demand with capacity, in substituting old and inefficient aircraft, and developing new markets with lower costs and greater efficiency.

Embraer S.A. primarily develops, produces and sells jet and turboprop aircrafts for civil and defense aviation markets in Brazil, North America, Latin America, the Asia Pacific and Europe.

Embraer is a leading manufacturer of 30-120 seat jets with a strong global customer base. The company has sold regional and mid-capacity jets to more than 80 customers on every continent of the world. Its customers include some of the largest and most significant regional and low-cost airlines and commercial carriers the world over.

Moreover, the company has a series of contracts and tie-ups with many other companies for its jets. Also, the continuous demand for E-Jets demonstrates the customers’ confidence in Embraer and of satisfaction with the product.

However, the market for commercial jets is highly competitive. The aircraft has to mainly compete with The Boeing Company’s (BA - Analyst Report) 717-200 and 737-500/-600, Airbus’ A318, and Bombardier’s CRJ-1000 along with upcoming Bombardier CSeries models.

We also remain concerned about the heavy tax burden, rising wages in Brazil, and potential loss of major contracts. Moreover, the highly competitive industry in which the company operates compels it to incur high costs along with the possibility of order cancellations. The company presently retains a short-term Zacks Rank #3 (Hold).

In the near term, we would advise investors to accumulate its short-term Zacks Rank #2 (Buy) peer Wesco Aircraft Holdings, Inc. (WAIR - Snapshot Report).

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