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Embraer to produce legacy jets in China, but no decision on E-jets

Analysis

Embraer and Aviation Industry Corporation of China (AVIC) signed (12-Apr-2011) a framework agreement aiming to implement a Legacy 600/650 production line in China, using the infrastructure, financial resources and workforce of their JV company Harbin Embraer Aircraft Industry Company (HEAI). In the next few weeks, the parties will finalise the details of the project and execute the relevant documentation.

Summary
  • Embraer and AVIC sign agreement to implement Legacy 600/650 production line in China.
  • Embraer's efforts to produce E-Jet family in China have not gained approval.
  • MTU Aero Engines' Maintenance group signs contracts worth around EUR400 million in 1Q2011.
  • MTU Aero Engines expands partnership with Atlas Air for engine maintenance.
  • EADS and GKN Aerospace collaborate to examine industrializing the Additive Layer Manufacturing process.
  • Aerospace manufacturers' share prices experience mixed movements on 12-Apr-2011.

For the past year, Embraer and Brazil have been lobbying China to allow the company to start producing its E-Jet family in China. Embraer has not gained approval, prompting it to focus on China's business jet market instead. Shares in Embraer were down 1.1% on Tuesday, while AviChina shares were up 1.1%.

See related report: More success for the E-190 in China but still no local production

Meanwhile, MTU Aero Engines' Maintenance group announced it signed new contracts worth around EUR400 million over 1Q2011. The wins include a major contract expansion from Atlas Air for CF6-50 and CF6-80 engines powering its B747 fleet, extending the partnership to 2020. MTU shares dropped 1%.

EADS and GKN Aerospace have announced they are launching a collaboration to examine industrialising the Additive Layer Manufacturing (ALM) process. The collaboration will be supported by a GBP1.96 million investment provided through a UK Department for Business, Innovation and Skills (BIS) Regional Growth Fund grant. Work will focus on the use of ALM within the aerospace sector. Shares in GKN Aerospace were down 3.9% in trading on Tuesday. EADS shares lost 1.1% amid widespread losses on equity markets yesterday.

Selected aerospace manufacturers share price movements (% change): 12-Apr-2011

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