Home Most Popular Investing Embraer Rolls Out C-390 Millennium Jets for South Korea in Win for International Operations

Embraer Rolls Out C-390 Millennium Jets for South Korea in Win for International Operations

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Embraer Rolls Out C-390 Millennium Jets for South Korea in Win for International Operations

Embraer S.A. ERJ celebrated a big win after securing a contract from South Korea’s Defense Acquisition Program Administration to provide its C-390 Millennium military transport aircraft to the Republic of Korea Air Force (“ROKAF”). This lucrative agreement is anticipated to impact Embraer’s backlog starting in the fourth quarter of 2023.

Embraer will not only be delivering an undisclosed number of aircraft tailored to ROKAF specifications but will also be responsible for delivering associated services and support, inclusive of training, ground support equipment and spare parts.

Significance of C-390

The C-390 Millennium, a medium-sized military transport aircraft, boasts the capability to transport a payload of over 26 tons, surpassing other aircraft in this category. With a flying speed of 470 knots, it is well-equipped to carry out various missions, including cargo and troop transport, medical evacuation, search and rescue, firefighting, and humanitarian operations.

Moreover, when outfitted with air-to-air refueling capabilities, christened as KC-390, the aircraft has performed admirably in aerial refueling operations, serving as both a tanker and a receiver, thereby enhancing its operational adaptability.

Since its launch, the existing fleet of C-390 aircraft has amassed over 10,800 flight hours, demonstrating an operational availability of approximately 80% and mission completion rates exceeding 99%. This astounding performance has notably attracted customers like South Korea to opt for C-390 as their military aircraft of choice, creating a surge in contracts for Embraer.

Embraer’s Prospects in Asia-Pacific Market

As nations increase their defense spending to fortify their armed forces, the demand for military aircraft has skyrocketed, with the Asia-Pacific region dominating the market. According to the report from Mordor Intelligence, the Asia-Pacific military aircraft market is projected to grow from $13.08 billion in 2023 to $20.76 billion by 2028, at a CAGR of 9.68% during 2023-2028. These developments bode well for companies like Embraer that have already established a presence in the region’s military aircraft market.

In October 2023, Embraer showcased its defense and security products and solutions at the ADEX 2023 event in Seoul. In 2022, the company signed a number of MOUs with Korean firms, including Aerospace Technology of Global, EM Korea Co., and Kencoa Aerospace, to supply parts for the C-390 Millennium in the future.

Peer Moves

Aside from Embraer, other aircraft manufacturers poised to benefit from the burgeoning Asia-Pacific military aircraft market include:

Boeing BA, which has a significant presence in the Republic of South Korea (ROK), India, and Southeast Asia. The company has been supplying defense products to ROK since 1950, encompassing the AH-64E Apache, F-15K Slam Eagle fighter jets, Peace Eye Airborne Early Warning and Control aircraft, among others.

Airbus EADSY, whose Asia-Pacific operations involve more than 150 light and medium tactical aircraft (C212, CN235, and C295) in service in the region. Furthermore, the A330 MRTT (multi-role tanker transport) has been adopted by the Air Forces of Australia, Singapore, and South Korea.

Lockheed Martin LMT, which boasts a well-established presence in the Asia-Pacific region. The company has been serving ROK for over 30 years with its F-35 Lightning II, T-50 Golden Eagle, C-130 Hercules, and Black Hawk, and is also assisting the Indian Air Force in strengthening its defense capabilities.

Price Performance

Over the past year, ERJ shares have surged 78.1%, outperforming the industry’s 9.9% decline.

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Zacks Rank

Embraer currently holds a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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