Funds will be used to finance acquisition of regional jets made by the Brazilian company
Embraer’s production line in São José dos Campos — Foto: Carol Carquejeiro/Valor
Apollo Global Management, one of the world’s largest asset managers, has set aside up to $1.5 billion to finance clients interested in buying Embraer regional jets. The move is likely to strengthen the Brazilian airline’s backlog.
Under the new program, a first definitive sale and leaseback agreement has already been signed for six E195-E2 jets for Porter Airlines, with deliveries scheduled for 2023 and financing under a pre-delivery payment (PDP) program.
Investors received well the news and Embraer shares ended Thursday’s session up 3.6%, at R$13.61, on Exchange B3. In the year, however, the securities are down 45%, erasing part of the nearly 200% rise seen in 2021, the highest of Brazil’s benchmark stock index Ibovespa.
According to Embraer, through the agreement with Apollo funds, tailored financing alternatives will be offered in addition to leasing options. The program also includes options to explore financing for customer projects focused on sustainability.
“Working closely with Embraer, Apollo has created a range of efficient and cost-effective financing options that offer our customers the individual flexible arrangements they need,” said Antônio Carlos Garcia, the Brazilian company’s chief financial officer, in a statement.
The program will be available primarily through Apollo’s aviation business unit, with dedicated investment funds, the PK AirFinance platform and its leasing and services affiliate Merx Aviation.
Gary Rothschild, CEO of Merx and head of aviation of Apollo, said in a statement the timing is “key” for the manager’s plans in the aerospace segment. “Apollo can make a difference at every point in the customer financing journey, from PDPs and bridge facilities to long-term leasing and debt products across the widest range of asset types and ages,” he said.
The Brazilian planemaker has innovated in its customer financing programs, which during the Covid-19 pandemic gained an important reinforcement from the Brazilian Development Bank (BNDES).
In June, the company’s firm order backlog totaled $17.8 billion, the highest since the second quarter of 2018. In the first half of the year, 17 airliners (E175 and E195-E2) and 29 business jets (Phenom 100 and 300, and Praetor 500 and 600) were delivered.
On Thursday, the company also reported that the C-390 Millennium multi-mission aircraft will debut this weekend at NATO Days, Europe’s most important security show. The event takes place in the Czech Republic.
*By Stella Fontes, Felipe Laurence — São Paulo
Source: Valor International