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Embraer to create new military plane

Embraer announced plans to engineer a new military cargo plane last Tuesday. The $1.3 billion is the company’s latest attempt to find alternative sources of revenue because the private and commercial aviation market is struggling against the global economic crisis.

KC-390 will be developed over a period of seven years in coordination with the Brazilian Air Force, which is expected to place an initial order of 22 models.

As Embraer unveiled its newest projects, the company also reviewed its delivery numbers for 2009. The aircraft manufacturer highlighted the challenges it will face in what is shaping up to be one of the toughest years in the industry’s existence.

Embraer has delivered 20 jets in the first three months of 2009, which marked a more than 50 percent decrease compared to last year. The recession has prompted cancellations that have led to a more than $ 1 billion reduction of profits compared to 2008.

In addition to developing luxury jets and commercial jets, the company is throwing a curve ball by beefing up its military line-up.   

“Our military projects have a history of success in exports. This is yet another case of great sales potential in the export market,” said Orlando Ferreira Neto, VP of defense market for Embraer.

Embraer also announced that it has signed a $140 million agreement with the Brazilian Navy to upgrade 12 of its jets in the next five years.