With the sale of 50 ERJ 145s and 50 ERJ 190s and 100 Phenom 100s, Embraer (ERJ) is riding a wave of good news, including breaking into the China market with the ERJ 145 and 190. The company, which brought a Phenom mockup to the New York Stock Exchange (NYSE) recently, and its briefing to investors resulted in Calyon Analyst Ray Neidl increasing its price target for the company's stock to $44.

Neidl noted, "The company continues to gain traction in its new regional jet aircraft family as well as garner customer wins for its new business jet product."

Accompanying Embraer to the NYSE was Magnum Jet, which just placed an order for 100 Phenom 100s in addition to optioning 50 more, which can be either the 100 or 300 series of the new business jet. The value of the contract is between US$137.5 million and US$275 million, if all options are converted into Phenom 100s. The new jet is expected to enter service in mid-2008. Magnum Jet is scheduled to take delivery of its first aircraft in early 2009. This contract is included in the previously announced order backlog of June 30, 2006, which consists of firm orders for over 235 Phenom jets. Neidl pointed out that Embraer's business jet backlog is $1.25 billion in firm orders.

"Embraer expects to achieve a significant slice of the business-jet pie," said Neidl in his report. "In the next 10 years, Embraer hopes to achieve an approximate 30 percent share of the business jet market, which it expects will grow to $144 million over the same period. It expects to deliver 15-20 Phenom 100s in 2008; 120-150 Phenom 100s and 300s in 2009; up to two Lineage 1000s in 2008 and three to four in 2009." The company also said that it expects to invest approximately $125 million in bizjet support and services with an announcement anticipated for this year's National Business Aircraft Association convention next month.

The order comes on the heels of a $2.7 million sale to HNA Group for 50 ERJ 145s and 50 ERJ 190s, the fourth largest airline in the nation. Deliveries for the $2.7 million deal are scheduled to begin in September 2007 for the 145 and December 2007 for the 106-seat 190. Harbin Embraer Aircraft Industry (HEAI) will produce the 145s, while the 190s will come out of Embraer's Sao Jose dos Campos factory. HEAI is a partnership between Embraer and China Aviation Industry Corporation II (AVIC II). The new aircraft will provide additional service on thin routes or open new markets to small and medium sized cities in the west and northeastern regions. HNA operates the largest fleet of regional jets in China.

A recent analysis of that market showed that passenger traffic was up 10 percent to 8.5 million passengers between 2004 and 2005. Research and Markets, which issued the report, indicated that civil aviation reform is deepening, thanks in large measure to growth in China's economy, the emergence of a consumer market and the liberalization of the aviation sector. The company expects the air transport industry will gradually enter a period of rapid growth that will lead world markets. The analysis is available at http://www.researchandmarkets.com/reports/c41097.

In other news, Embraer and BNP Paribas closed on a US$500 million syndicated standby facility, designed as a hedging instrument to support the company's finance strategy. Led by BNP, the financing includes a $250 million trade finance credit facility, available for disbursement in the next three years with a two-year repayment term as well as a $250 million Revolver Credit Facility, available in multiple withdrawals. Embraer noted this was the first large transaction since it was awarded investment grade rating by both Moody's and S&P, and represents a tool to better its debt profile. The syndicate includes Sole Bookrunner, Banco do Brasilia, Banco Latinoamericano de Expertaciones SA, Banco Bradesco SA, Natexis Banques Populaires and Sumitomo Mitsui Banking Corporation. In addition, investors include ABN Amro Bank, Banco Santander Central Hispano, Banco Bilbao Vizcaya Argentaria, Credit Industrel et Commercial, HSBC Bank, JP Morgan Chase, the Bank of Tokyo-Mitsubishi, Citibank and Sanpaolo Imi Bank.

Embraer also delivered the first ERJ 195 to Flybe, the launch customer of the 118-seat jet. The aircraft was the first of 14 ordered by the UK-based carrier which has also taken options on another 12. The new aircraft replace the airline's BAe 146s.

The company completed its U.S. tour of the 100-seat ERJ 190, visiting 14 airlines in 10 states and several Caribbean islands. The nearly three-week tour came on the heels of its July Farnborough visit. By the end of the year, the ERJ 190 will log stops in 68 cities in 43 countries on six continents and 95 airlines.