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14/09/2010 | Argentina in talks with Embraer over military plane

Reuters Staff

Argentina could soon join with other countries in the region to help develop a military transport plane built by Brazilian aircraft maker Embraer, a defense ministry spokesman said on Monday.

 

Brazilian daily newspaper Valor Economico reported on Monday that Brazilian and Argentine governments were working out details of the accord.

Citing an unnamed Brazilian defense official with knowledge of the situation, Valor said a letter of intent for a preliminary order would likely be signed soon, but the Argentine spokesman declined to comment on a purchase.

"I can confirm that we've been working hard to advance Argentina's participation in this plane," Jorge Bernetti, a defense ministry spokesman, told Reuters.

"Work is continuing on this and the estimatation is that the deal will be concluded by the end of September or early October," he added, referring to a possible deal on Argentine involvement in the plane's construction.

The deal could be the sixth in about two months for Embraer's defense unit, after Brazil, Chile, Colombia and Portugal entered contract talks. The plane, known as KC-390 and which is expected to operate as early as 2015, has a cargo capacity of 23.6 tonnes.

The government of South Africa could join the KC-390 program, the source told Valor, without elaborating.

Orders for the plane rose to 52 after the Portuguese government expressed interest in buying up to six aircraft last week. Embraer (EMBR3.SA)(ERJ.N) will produce up to 180 cargo planes in the first 10 years of operation of the program, and has said potential demand could reach up to 700 units in the same period.

Embraer said in a statement on Monday it signed an agreement with the Czech Republic that could lead to the purchase of two KC-390s and would open the way for companies in the European country to help develop and design the aircraft.

The Sao Jose dos Campos, Brazil-based company derived about 13 percent of its revenue in the second quarter from the defense segment and 61 percent from commercial planes.

An Embraer spokesman did not have an immediate comment on the Valor report.

Shares of Embraer were up 0.7 percent at 11.57 reais on Monday afternoon trading in Sao Paulo. American depositary receipts of the company were up 1.7 percent at $27.37 on the New York Stock Exchange. 

**Reporting by Guillermo Parra-Bernal in Sao Paulo and Luis Andres Henao in Buenos Aires, Editing by Lisa Von Ahn and Leslie Gevirtz

Reuters (Estados Unidos)

 


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