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Sweden to purchase four planes with option for seven more

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Embraer ( ERJ ) targets fresh defense sales soon

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Planemaker continues U.S. push

By Gabriel Araujo

SAO PAULO, Oct 6 (Reuters) - Brazilian planemaker

Embraer ( ERJ ) tied up a deal on Monday to sell four

military cargo planes to Sweden to replace the European nation's

aging aircraft, the latest under a joint procurement program

with other countries in the region.

Sweden will purchase Embraer's ( ERJ ) C-390 Millennium aircraft

after selecting the model last year, joining an agreement led by

the Netherlands which is acting as agent and representative for

the other countries in the strategic partnership.

"Under that contract, the Netherlands added seven more

aircraft for ally nations," Embraer's ( ERJ ) defense head Bosco da

Costa Junior said in an interview. "This

government-to-government process speeds up the purchasing

process here in Europe."

Shares in the planemaker rose around 3% in afternoon

trading, making it one of the top gainers on Brazil's Bovespa

index.

The Swedish order also includes an option for seven

additional aircraft, which analysts at BTG Pactual noted was a

"positive surprise."

In turn, Brazil is expanding its fleet of Gripen fighter jets

from Swedish planemaker Saab. Saab and Embraer ( ERJ ) have

had a joint production line for Gripens in Brazil since 2023,

with Costa saying the first made-in-Brazil Gripen should be

delivered to the Brazilian Air Force early next year.

Embraer ( ERJ ) has been working to expand its defense footprint

abroad, primarily through C-390 sales.

"We hope to have new announcements coming very soon," Costa

said.

While Costa declined to name potential buyers, Brazilian

Defense Minister Jose Mucio has suggested Finland and Turkey

could purchase Embraer ( ERJ ) aircraft.

"Minister Mucio always says wise things," Costa said. "I

hope he is right this time too."

U.S. AMBITIONS

Embraer ( ERJ ) has long been pushing to crack the U.S. market, though

tariffs on imports of its planes could stymie those plans. While

U.S. President Donald Trump exempted aircraft from a 50% tariff

on goods from Brazil, they still face a previously imposed 10%

duty.

The planemaker lobbied hard for tariff relief, especially after

a U.S.-European Union deal was reached on aircraft.

As part of its pitch to be exempted, Embraer ( ERJ ) has floated

building a $500-million U.S. assembly line for the KC-390,

should the country decide to purchase the military jet.

However, the KC-390 competes with U.S.-based Lockheed

Martin's ( LMT ) C-130 Hercules.

"We have been very vocal, saying clearly that we have every

interest in assembling and building the KC-390 in the U.S.,"

Costa said.

The executive had previously mentioned Northrop Grumman ( NOC )

had the capacity to help Embraer ( ERJ ) develop the aircraft in

the U.S.

"Maybe we can announce this partner to the market by the end

of the year. That's what we're working toward," Costa said.