Monday, October 05, 2020

India admits interest in buying Embraer commercial division

The Indian government has taken an interest in acquiring Embraer’s commercial division, the newspaper Business Standard revealed. Citing a senior government official, the publication said India would be “very interested” in the deal, originally closed by the Brazilian company with Boeing.

India’s interest in Embraer was revealed in May by Reuters, and shortly thereafter confirmed by the company itself, which also cited China as another possible partner. But at the time, the Indian government did not comment on the matter officially.

“We are very interested. We are exploring alternatives,” said the source, who acknowledged that the Brazilian government has already been communicated on the matter. The official also said that the purchase would be financed through India’s sovereign wealth fund, the National Investment and Infrastructure Fund.

The official admitted the risk of an agreement like this in a period of so many uncertainties, but argued that there is no such opportunity in the aviation market.

Another aspect that makes Embraer interesting is the drop in its market value, which intensified after the coronavirus pandemic. The Indians could pay a much lower price than that offered by Boeing, of $4.2 billion for 80% of the commercial aircraft division, even at a time when the Brazilian manufacturer enjoyed financial health.

India has been manufacturing aircraft for many years, but without any leading role. The most important company in the sector is HAL (Hindustan Aeronautics Limited), which was founded in 1940 and belongs to the Indian government.

The company has already produced several models under license, including Russian and European aircraft. HAL has also developed some of its own aircraft, such as the LCH attack helicopter, the Tejas fighter and the Saras, a regional turboprop that resembles the Embraer CBA-123 Vector. None of them, however, achieved great projection.

05/10/20 Ricardo Meier/Airway

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