Brazil-based Embraer S.A. (NYSE:ERJ) has won a contract from Colorful Guizhou Airlines for up to five E190s, comprising two firm orders and three purchase rights. The expected value of the contract is $249 million at the current list price, if all purchase rights are exercised.
The two firm orders will be included in Embraer’s third-quarter 2016 backlog and are scheduled for delivery in 2017.
Past Orders
Embraer had received orders from Colorful Guizhou Airlines for seven E190s at the 51st International Paris Air Show in Jun 2015. Of these, four have already been delivered.
It goes without saying that the high quality of the E190s already delivered to Colorful Guizhou Airlines spurred the second order for the same aircraft.
EMBRAER AIR-ADR Price
Colorful Guizhou Airlines’ View about Embraer
Zhai Yan, chairman of Colorful Guizhou Airlines, believes that this newly established and the first locally owned airline in Guizhou province requires established aircraft services to assure stable operations. In the last eight months, E190s have performed as per the airlines’ expectations and have helped it to provide passengers with a good travel experience.
The airline is hopeful that the E190 fleet will help in building a “sky passageway inside and beyond Guizhou province.” Also, the airline expects to develop connectivity in China’s Southwest Region with E190s in due course.
Embraer’s View on China
According to Guo Qing, Vice President, Sales & Marketing, Commercial Aviation, Embraer China, the country is one of the world’s most vibrant aviation markets and Guiyang is a significant potential hub in southwestern China. Being associated with Colorful Guizhou Airlines, the company expects to contribute to the Chinese government’s ‘Belt and Road Initiatives’ by providing the best products to passengers.
Since long, Embraer is the leader in Chinese regional aviation with a market share of about 80%. At present, Embraer has 228 firm orders in China, which comprises 190 commercial aircraft - 38 are executive jets and 21 are awaiting government approval. Up till now, the company has delivered 168 aircraft.
More about Embraer
The company is the world's third-largest commercial aircraft manufacturer after The Boeing Co. (NYSE:BA) and Airbus Group (PA:AIR) SE (OTC:EADSY) . The company designs, manufactures and sells aircraft and systems under both commercial and executive aviation, and defense and security segments.
Embraer currently has a Zacks Rank #5 (Strong Sell).
A Stock to Consider
A better-ranked stock in the aerospace and defense industry is Engility Holdings, Inc. (NYSE:EGL) , sporting a Zacks Rank #1 (Strong Buy).
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