Embraer Banking on Trump to Clear Way for Iran Regional Jet Sale

  • Airbus, Boeing won export licences under Obama administration
  • CEO Silva says new presidency has created ‘uncertainty’

Brazilian planemaker Embraer SA, the world’s biggest maker of regional jets, said it’s optimistic that a U.S. government led by Donald Trump will still grant it the clearances needed to sell aircraft to Iran.

While Airbus Group SE and Boeing Co. have already sealed deals to supply a range of jetliners to the Islamic republic after obtaining licenses under the Barack Obama administration, Embraer is in the final stages of order talks, Chief Executive Officer Paulo Cesar de Souza e Silva said in an interview.

“There is a lot of uncertainty now regarding this new administration,’’ Silva said Wednesday at the World Economic Forum in Davos. “But I believe in general terms Mr. Trump is a businessman. He is very pragmatic and he is for business. So we hope things won’t change too much.’’

The U.S. is able to block plane exports to Iran from foreign manufacturers even after the easing of international sanctions because of the high American content of most aircraft. Embraer’s current models use General Electric Co. engines, while Pratt & Whitney powerplants will feature on new versions.

Embraer is aiming to meet Iran’s requirement for jets with 130 seats or fewer after Airbus won orders for 98 bigger aircraft and Boeing secured a deal for 80. The Mideast country is initially looking to take at least 20 E195 jets worth more than $1 billion at list prices, senior Brazilian officials said last year. Silva didn’t specify how many orders his company is targeting.

New Models

Development of Embraer’s E2 second-generation regional jets and the KC-390 military transport is “100 percent on time,” Silva said. The final 190-E2 test plane is due to fly next month and both it and the KC-390, designed to replace Lockheed Martin Corp.’s C130 Hercules, should win certification this year.

Silva said Embraer’s decision this week to start a road show ahead of the possible sale of 10-year, dollar-denominated bonds reflects a “window of opportunity” presented by a “very liquid” market, while declining to provide further details of the sale.

The worst may also be over for Brazil’s wider economy following an 8 percent contraction in the past 2 1/2 years, Silva said. President Michel Temer, who took over after Dilma Rousseff’s impeachment, is “taking the right steps,” with lower inflation and a drop in interest rates suggesting the recovery process is “going forward,” he added.

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