By Gabriel Araujo
SAO PAULO (Reuters) -Brazilian planemaker Embraer SA on Tuesday announced new aircraft orders from Porter Airlines and Alaska Air Group Inc, sending its shares higher, as it reaped an upsurge linked to the Farnborough Airshow in Britain.
Embraer said Canada-based Porter Airlines has ordered an additional 20 E195-E2 aircraft to support its expansion plan in North America, while Alaska ordered eight new E175 jets for its regional airline subsidiary Horizon Air.
Shares in Embraer rose 4.9% to 11.86 reais after the announcements, making it one of the top gainers on Brazil’s Bovespa stock index, which was up 0.6%.
Porter’s deal adds to an existing 30-aircraft firm order from the company and was valued at $1.56 billion, taking its orders with Embraer to up to 100 aircraft, including 50 firm commitments and 50 purchase rights.
Alaska’s order for eight new jets also included options for 13 more, the Brazilian company said, adding that the contract was valued at $1.12 billion considering options.
“The E175 is the backbone of the U.S. regional network,” said Embraer’s Commercial Aviation VP for the Americas, Mark Neely.
Porter’s first delivery and entry into service is scheduled to the second half of 2022, while Alaska’s airplanes are expected to be delivered over the next four years starting in the second quarter of 2023.
Analysts at BTG Pactual said deals sealed at the Farnborough Airshow, running from July 18-22, reinforce a rebound in commercial aviation, spurred by the COVID-19 vaccine rollout.
“Rebounding commercial aviation is one of the pillars supporting our view on Embraer’s investment thesis, which we see combining an interesting reopening call with a high-tech (expanding) business platform,” they said.
INDUSTRY PROJECTIONS
Embraer also announced its outlook for the next 20 years, saying it expects global demand for air travel measured by Revenue Passenger Kilometers (RPK) to grow by 3.2% per year in the period.
The projection came roughly in line with last year’s estimate of a 3.3% growth even as factors such as a global economic deceleration and the Ukrainian war take their toll.
The planemaker added it sees RPKs returning to 2019 levels by 2024 as the industry recovers from the pandemic-related downturn.
Embraer, which is the world’s No. 3 planemaker behind Boeing Co and Airbus SE, also said it expects global demand for new aircraft of up to 150 seats to reach 10,950 units over the next two decades.
Embraer, which estimated the market for such planes at $650 billion, is set to report its second-quarter results on July 28.
Chief Financial Officer Antonio Carlos Garcia said in May the company had already won enough orders to meet the top end of its targeted revenue range for this year, although supply chain constraints remain an issue.
Embraer also said earlier on Tuesday that it had launched a joint venture with BAE Systems PLC to develop a defense variant of an electric aircraft, part of a broader defense partnership between the two companies.
(Reporting by Gabriel Araujo, editing by Ed Osmond and Bernadette Baum)
