Embraer seeks entry into aircraft financing through partnership with the ADB


Brazilian aircraft manufacturer Embraer, emboldened by its success to sell their E170 and E190 jets to Kenya Airways and other leading African airlines, but also clearly rattled by Bombardiers relentless offensive to get into the lucrative African market with their newer CRJNG models and from 2014 onwards with their state of the art CSeries, has reportedly started talks with the African Development Bank on aircraft finance cooperation. The expressed objective appears the formation of an Africa based aircraft leasing company, in which both Embraer and the ADB could have a financial interest, aimed to make modern jet and turboprop aircraft more affordable by African airlines and in the process promote safer and more affordable air transport across the continent.

Embraer has risen to become the world’s third largest aircraft manufacturer after global giants Airbus and Boeing – strictly named in alphabetical order not in judgment over one being larger than the other – and Bombardier is clearly keen to step on to the podium themselves, buoyed by their own success in selling the proven Dash 8, followed by the Q300 and now their Q400NG to African airlines. That success was followed by sales of previously owned CRJ200 jets to airlines mainly in East Africa, before next week delivering the first of initially two brand new CRJ900NG to RwandAir.

Embraer’s efforts to join hands with the ADB are seen in the light of aircraft finance hard to come by otherwise, often leading to privately owned African carriers opting for ageing and older jets instead of buying state of the art birds which burn a lot less fuel, are more maintenance friendly and meet environmental standards of the 4G aircraft generation, but are difficult to afford due to the capital requirements for purchase or lease. While in the past supporting and assisting buyers through efforts of the Brazilian government to provide export guarantees, entry into the aircraft leasing league will clearly give Embraer an added advantage when laying out the key selling points to African airlines.

Meanwhile has it been learned that Bombardier is considering to extend support to aircraft maintenance organizations willing to invest in carrying out heavy maintenance on their aircraft in operation across Africa and that exploratory talks have taken place with potential investors from within the industry to specialize in Bombardier type maintenance tooling and spare inventories. Such talks were reportedly on the agenda of the Embraer team accompanying the Q400 demonstration tour of Africa, where this latest generation of turboprop aircraft was introduced in our region to airlines in Dar es Salaam, Nairobi and Kigali, resulting in a number of ongoing sales negotiations.

Africa, inspite of or because of its continental aviation safety record, has of late been the target of ICAO and IATA to promote greater safety awareness and the use of modern aircraft will go a long way in bringing the African continent’s accident average in line with global figures. Air traffic to and from Africa is expected to grow faster than global average in coming years and demand for new aircraft, right sized aircraft of the makes of Embraer and Bombardier, is projected to be lucrative enough for both manufacturers to pull out all the stops and use every tool in the marketing, sales and strategy manuals to become the company of choice for existing and new airlines. Watch this space.