Embraer (NYSE: ERJ) delivered a total of 14 jets in the first quarter of 2020, of which five were commercial aircraft and nine were executive jets (five light and four large). As of March 31st, the firm order backlog totaled USD 15.9 billion.
Historically, Embraer seasonally has fewer deliveries during the first quarter of the year, and in 2020 in particular, the commercial aircraft deliveries in the first quarter were also negatively impacted by the conclusion of the separation of Embraer’s Commercial Aviation unit in January.
During the first quarter, Embraer Executive Jets announced that the new Phenom 300E was granted its Type Certificate by ANAC (National Civil Aviation Agency of Brazil), EASA (European Union Aviation Safety Agency) and the FAA (Federal Aviation Administration). The new Phenom 300E is the recently enhanced version of the Phenom 300 series, which was the most delivered business jet series in the 2010s.
Also in this period, Emgepron, a Brazilian state-owned company linked to the Ministry of Defense through the Brazilian Navy Command, and Águas Azuis, a company created by thyssenkrupp Marine Systems, Embraer Defense & Security and Atech, signed the contract to build four state-of-the-art Tamandaré Class Ships, with deliveries scheduled between 2025 and 2028.
Consortium of bidders led by Advent, Cinven and RAG foundation
Sales proceeds pave the way for further transformation of thyssenkrupp
Cash inflow remains within the company
Buyers give far-reaching site and employment guarantees for tk Elevator
Closing and purchase price payment expected by the end of the current fiscal year
Martina Merz: “With the sale of Elevator, thyssenkrupp can pick up speed again. We will reduce the company’s debt as far as is necessary and at the same time invest as much as is reasonable in its further development.”
thyssenkrupp sells its Elevator Technology business entirely to a consortium led by Advent, Cinven and RAG foundation. The respective Executive Board decision was approved on Thursday evening by the Supervisory Board of thyssenkrupp AG. The purchase agreement has been signed. Closing of the transaction is expected by the end of the current fiscal year. The purchase price is €17.2 billion. thyssenkrupp will reinvest part of the purchase price[1] (€1.25 billion) in a stake in the elevator business. The transaction is subject to merger control approvals, although thyssenkrupp does not expect the competent authorities to have any reservations. The proceeds from the transaction will remain within the company and are to be used to the extent necessary to strengthen the balance sheet. Alongside this, the proceeds shall be used to advance the development of the remaining businesses and the portfolio. As announced at the Annual General Meeting at the end of January, thyssenkrupp is proceeding the analysis phase so that a decision on the concrete use of funds can be taken in May.
Martina Merz, CEO of thyssenkrupp AG: “With the sale, we are paving the way for thyssenkrupp to become successful. Not only have we obtained a very good selling price, we will also be able to complete the transaction quickly. It is now crucial for us to find the best possible balance for the use of the funds. We will reduce thyssenkrupp’s debt as far as is necessary and at the same time invest as much as is reasonable in developing the company. With this, thyssenkrupp can pick up speed again.”
The sale of Elevator is a favorable solution not only for the company, its shareholders, customers and employees, but also for the elevator business itself. In the consortium, thyssenkrupp has found new owners for the elevator business who have extensive industrial expertise and offer the workforce a high degree of security. The buyers have a strong track record in profitably growing and nurturing companies to become global champions.
In negotiations with employee representatives and the IG Metall trade union, the buyers have committed to far-reaching site and employment guarantees. In addition, it was agreed that the buyers will continue to manage thyssenkrupp Elevator as a global group. The company will also remain based in Germany and employee co-determination will continue. That means the solution is in line with thyssenkrupp’s understanding of corporate and social responsibility.
“We are not pleased to part with our employees and the elevator business. Nevertheless, today is a good day for everyone involved. With this step, we are opening up real prospects for the future: for the elevator business as an independent company and, with the financial solidity we have gained, also for all other areas of thyssenkrupp,” Martina Merz added.
New Technology Creates Hyper Elevators That Can Go Sideways
On March 5th, in Rio de Janeiro, Emgepron, an independent state company, linked to the Ministry of Defense through the Brazilian Navy Command, and Águas Azuis, a company created by thyssenkrupp Marine Systems, Embraer Defense & Security and Atech, signed the contract for building four state-of-the-art Tamandaré Class Ships, with deliveries scheduled between 2025 and 2028.
The construction will take place 100% in Brazil, in Itajaí, Santa Catarina State, and is expected to have local content rates above 30% for the first vessel and 40% for the others. thyssenkrupp will supply the naval technology of its proven MEKO® Class shipbuilding platform of defence vessels that is already in operation in 15 countries. Embraer will integrate sensors and weaponry into the combat system, bringing also to the program its 50 years’ experience in systems technology solutions and in-service support.
Atech, an Embraer Group company, will be the supplier of the CMS (Combat Management System) and IPMS (Integrated Platform Management System, from L3 MAPPS), and the recipient of technology transfer in cooperation with ATLAS ELEKTRONIK, a thyssenkrupp Marine Systems subsidiary that produces the CMS and sonar systems.
“We are grateful to participate again in such important milestone in the history of Brazil’s naval defence with the most advanced ships in their class. Looking back the great achievements we had since the construction of Tupi Class submarines in 1980s, it is a recognition of the technological excellence, reliability and longevity solutions we have offered for almost two centuries. The Tamandaré Class Programme will strengthen our ties by transferring technology and generating highly qualified jobs for the country”, said Dr. Rolf Wirtz, CEO of thyssenkrupp Marine Systems.
“The partnership validates our efforts to expand our defence and security portfolio beyond the aeronautical segment. Over the past few years, we have acquired expertise in developing and integrating complex systems, among others, in order to qualify Embraer to meet the needs of the Brazilian Navy, further strengthening our position as a strategic partner of the Brazilian State”, said Embraer Defense & Security President and CEO Jackson Schneider.
In addition to construction, the contract includes a sustained transfer of technology in naval engineering for building military ships and combat and platform management systems, as well as integrated logistical support and lifecycle management.
The Tamandaré Class Programme has the potential to generate direct and indirect job opportunities of high level of qualification. It provides for a solid national partnership model with proven ability to transfer technology and qualify local labour, which guarantees the development of future strategic defence projects in Brazil.
The naval alliance between thyssenkrupp Marine Systems and Embraer Defense & Security can also enable creating a base for exporting naval defence products from Brazil.
São José dos Campos, SP, Brazil, May 3rd, 2019 – Embraer (NYSE: ERJ; B3: EMBR3;) delivered a total of 22 jets in the first quarter of 2019 (1Q19), of which 11 were commercial aircraft and 11 were executive jets (8 light and 3 large). As of March 31st, the firm order backlog totaled USD 16.0 billion.
In the first quarter, Embraer delivered the first E175 jet to Mauritania Airlines, the first of this model to the African continent. The airline signed a firm order for two E175 jets in 2018. The contract has a value of USD 93.8 million at current list prices.
Embraer also signed, in April, a firm order for 10 E195-E2 jets with Nigeria’s largest airline, Air Peace, which will become the first E-Jets E2 operator in Africa. The contract includes purchase rights for a further 20 E195-E2. With all purchase rights being exercised, the contract has a value of USD 2.12 billion based on current list prices. This order will be included in Embraer’s 2Q19 backlog.
The world’s best-selling light jet for the seventh consecutive year, the Phenom 300 reached the mark of the 500th aircraft delivered, becoming the only business jet model to reach this milestone in the last 10 years. The aircraft is in operation in more than 30 countries and has accumulated more than 780,000 flight hours. This milestone followed the announcement of the first Phenom 300E and Praetor 600 business jet sales to Brazilian customers.
Embraer Defense & Security and its partner Sierra Nevada Corporation (SNC) announced in February a contract for 12 A-29 Super Tucano light attack aircraft to the Nigerian Air Force. This sale was already included in Embraer’s 4Q18 backlog.
In the period, the Brazilian Navy also announced that the Águas Azuis Consortium, formed by thyssenkrupp Marine Systems, Embraer Defense & Security and Atech, was selected for the construction of four defense ships in the Tamandaré Corvettes Class Program (CCT) as preferred bidder.
In the Services & Support segment, Embraer and WDL Aviation GmbH, a German charter business which is part of the Zeitfracht logistics group, signed an agreement for a Flight Hour Pool Program to support the airline’s recently leased fleet of four used E190s. Air Astana, a flag carrier of Kazakhstan, also signed a multiyear agreement for a Flight Hour Pool Program to support the component needs for the airline’s new E2 fleet, Embraer’s second generation of the E-Jets family of commercial aircraft.
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About Embraer
A global aerospace company headquartered in Brazil, Embraer celebrates its 50th anniversary with businesses in Commercial and Executive aviation, Defense & Security and Agricultural Aviation. The company designs, develops, manufactures and markets aircraft and systems, providing Services & Support to customer after-sales.
Since it was founded in 1969, Embraer has delivered more than 8,000 aircraft. On average, about every 10 seconds an aircraft manufactured by Embraer takes off somewhere in the world, transporting over 145 million passengers a year.
Embraer is the leading manufacturer of commercial jets up to 150 seats and the main exporter of high value-added goods in Brazil. The company maintains industrial units, offices, service and parts distribution centers, among other activities, across the Americas, Africa, Asia and Europe.
