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New Narrowbody Aircraft From Embraer Could Transform The Company’s Future, But The Question Is: How To Finance This Dream Without Disrupting The Market?
Embraer is facing a decision that could redefine its future. The Brazilian jet manufacturer is considering investing nearly US$ 8 billion in the development of a new narrowbody aircraft by 2027. This decision not only promises to revolutionize the company’s operations, but also to establish it as a leader in the global aviation sector. The challenge? Financing the project without negatively impacting its shares in the market, according to the site.
What’s At Stake
Narrowbody aircraft, known for their narrow fuselage and capacity for up to 200 passengers, are essential for short and medium-haul routes. According to Bradesco BBI, this new project could achieve a Internal Rate of Return (IRR) of 20%, adding US$ 3.3 billion of Net Present Value (NPV) to the company. Moreover, revenue could grow by US$ 27 billion when considering ancillary services.
Among the expected benefits are:
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Cheaper than new HB20, Onix, and Argo, this German sedan offers a 510-liter trunk, a 2.0 naturally aspirated engine, a 6-speed Tiptronic automatic transmission, and well-known mechanics; the 2016 Volkswagen Jetta Comfortline still draws attention in the used car market.
- Scale with suppliers, reducing costs.
- Two engine suppliers for the new model.
- An integrated portfolio, providing a competitive advantage over rivals.
- Growth that could drive mergers and acquisitions.
Embraer’s Smart Financing
One of the greatest challenges for Embraer is financing the project without compromising its market position. The solution may lie in the financing structure of EVE, the subsidiary that manufactures electric aircraft (eVTOL). Analysts suggest that Embraer’s experience and suppliers’ commitment could attract investors, allowing for the sale of a 25% minority stake in the narrowbody project, mitigating the direct financial impact.
What Do The Experts Say?
With a 150% growth in 2024 in the Ibovespa, Embraer remains one of the market favorites in aviation. Bradesco BBI recommends buying the stock with a target price of R$ 58. Meanwhile, Itaú BBA reinforces its recommendation for the ADRs (American Depositary Receipts), with a target price of US$ 51, indicating an upside potential of 23.5%.
Despite the recent rally, analysts believe there is ample room for appreciation, supported by pillars that make Embraer a more resilient and diversified company. The expectation is for an annual growth of 10% in EBITDA, coupled with robust cash generation in 2025.
A Embraer deveria fabricar trens, helicópteros, submarinos, veículos blindados e não gastar tanto pra fazer aeronaves, vende esses projetos que já existem e foca em outras categorias mais suaves. Investimento de mto risco
A Embraer sabe que o 737 MAX é um fracasso desde antes dele nascer. Ela iria projetar um avião para a categoria, estava previsto em 2012. Mas a diretoria da empresa resolveu, por motivos inconfessáveis, entregar a Embraer
à Boeing, alegando que seria a salvação da Embraer. Seria o fim da empresa e a salvação da Boeing. Vai sair com grande atraso. Mas antes tarde do que nunca, a Airbus está sozinha no segmento, que é o maior do mundo. O 737 Max é um “lixo”.
A Embraer é boa naquilo que tem feito. Até um cargueiro do tamanho do C-17 ou Galixe poderia dar certo. Quem sabe un novo projeto para para capacidade de 450 passageiros. Há tecnologia já tem. É só aumentar a planta. Em vez de 2 motores, passa para 4 motores.