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Embraer Falls as Brazil Cuts Order for Multi-Mission Aircraft by 25%

By Dhirendra Tripathi – Embraer (NYSE:ERJ) ADRs fell more than 4% Friday after the Brazilian government cut the size of contracts for 28 multi-mission aircraft by 25%.

Embraer got the orders for the next-generation aircraft, KC-390, for the country’s air force in 2014.

The company said it “became aware” of the government’s decision and will seek legal measures relating to the economic rebalancing of the contracts once the decision is formally notified. The company hasn’t evaluated how the reduction of the contracts will affect its business and results.

The KC-390 aircraft was developed as a joint project between the Brazilian air force and Embraer and is used for search and rescue operations, cargo and troop transport, launch capabilities, and also aerial refueling.


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