E-jet deal opens Venezuela for Embraer

Aug. 1, 2012 at 11:02 AM
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BRASILIA, Brazil, Aug. 1 (UPI) -- A $900 million deal for the Brazilian sale of 20 E-190 commercial jets has opened newly confirmed Mercosur member Venezuela as a potential major market for regional aviation and defense suppliers.

Brazil's aviation and defense manufacturer Embraer secured the contract as one of the first rewards of Brazil's diplomatic support for Venezuela's confirmation as a full member of the trade bloc.

Venezuela had been fighting for full membership since 2006. The last obstacle, Paraguay's congress, was removed when that land-locked country was suspended from Mercosur membership in a controversial government change in June.

Brazil was backed by Argentina and Uruguay, three key economies looking for new markets in the region.

Both Brazilian President Dilma Rousseff and Venezuelan President Hugo Chavez said Venezuela's induction as a full member was confirmation of Mercosur as a regional power.

Embraer is the lead aviation and defense manufacturer in Latin America and is aggressively seeking new markets in the Latin American and Caribbean region amid concerns the global economic downturn may hit the company's profits.

Embraer sees oil-rich Venezuela as a potential major customer for both aviation and defense aircraft, industries where it says it has an edge over rivals from North America and Europe.

Embraer and Venezuela signed the deal on the sidelines of a summit conference for the inclusion of Venezuela as a full member of Mercosur.

The company has sold the E-190 to more than 60 airlines in 42 countries. It is also tapping markets for its Super Tucano light attack aircraft, which has edged out rivals on compatibility and price.

Venezuela will receive six of the E-190 jets this year and the remainder in the coming months.

The E-190, a mid-range commercial aircraft, can carry 98-114 passengers and has done well in countries where regional air transport has boomed in recent years, including the Middle East and Africa.

The aircraft bought by Venezuela will be deployed for use by the state-own national airline Conviasa.

Venezuela's defense purchases in the 2012-13 period are yet to become clear but Brazilian manufacturers are hoping for a bigger slice of Venezuelan imports and the country's reduced depends on purchases from Russia.

Venezuela's admission to Mercosur was widely backed because of its voracious consumer market. Mercosur trade surplus with Venezuela exceeds $5 billion a year.

Major energy consumers including Brazil and Argentina also see Venezuela's entry as strategically important because Caracas in the past has offered oil on preferential terms to neighbors and extended long-term credit to poorer countries in the Caribbean and Central America.

On the flip side, leaders of Venezuela's neighbors in Mercosur are coming to terms with the populist style of Chavez and his frequent asides at the United States and countries it regards as right-leaning, including U.S. ally Colombia.

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