Brazilian Development Bank Supports Export of Embraer E-Jets to the USA

LONDON – The Brazilian Development bank has shown its support for the export of 6 Embraer E-jets to the USA.

Approval


The Brazilian Development Bank (BNDES) has shown its support for the export of 6 Embraer E-jets to the United States to be delivered to SkyWest. The aircraft will be delivered through the end of the year to SkyWest under the order previously made with Embraer.

The Brazilian Bank will be the one financing the order, which has a value of R$670 million, or approximately USD $129 million.

The financing will be happening through the BNDES Exim Post-shipment, with disbursements made in reais (multiple Brazilian reals), while SkyWest is paying the bank in dollars, creating a foreign currency deposit in the Brazilian bank.

It’s the second time a financing trance (usually debt instruments such as bonds) has been made with the Brazilian Development Bank for the sale of the Embraer E-jets for export to SkyWest using the innovative Aircraft Finance Insurance Consortium (AFIC) offering from Marsh, who is the world’s largest insurance broker and risk advisor.

The financing was executed in December 2020 for about R$400 million, or approximately USD $77 million.

The Aircraft Non-Payment Insurance (ANPI) policy is underwritten by four international insurance groups: AXA XL, AXIS Capital, SOMPO International, and Fidelis Insurance.

The ANPI policy provides that, in the event of default by the debtor, the insurers make all scheduled payments to the lender until all outstanding principal is repaid.

The AFIC insurance offers also increases the flexibility and speed of implementation of financing between the parties for buyers of Embraer aircraft.

Previous orders


The approval of the coming 6 planes is part of the 24 planes that SkyWest had ordered back on 7 October 2021, just over a year ago today.

SkyWest is one of the biggest E-jets operators worldwide, with a current fleet of 232 active Embraer E-170s that they are operating for Delta Air Lines.

The order back then was also done the same way through BNDES, with approved financing of USD $500 million, or R$2.6 billion.

“As the world’s largest owner/operator of the Embraer E175 aircraft, SkyWest has been very pleased with BNDES’s support as our primary financing partner for this important plane,” said Robert Simmons, SkyWest’s Chief Financial Officer.

“BNDES has epitomized partnership through years of growth in a variety of economic environments.”

“BNDES’ support is essential as the air transport market recovers in the US, the main market for our Embraer 175 jet. Regional aviation has played an extremely important role in the recovery of commercial flights around the world, and this has benefited Embraer jets, which are the most efficient in the industry. We are the largest exporter of high-value goods in Brazil and have been able to implement and offer smart and flexible financing solutions for our customers, in line with the growth strategy we project for the next few years,” says Antonio Carlos Garcia, Embraer’s Executive Vice President, Financial and Investor Relations.

This is a very big deal for Embraer as they not only have a lot of faith in their one true customer but also in bolstering their own economy, which would definitely need a boost after the COVID pandemic has had a big bust.

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