Brazilian Airline Azul and aircraft manufacturer Embraer have reached an agreement to defer its order of 59 E2 jets, which comes after the airline increased its order by 50 per cent earlier this year.
The airline has made the decision to defer to help conserve cash as it faces the downturn due to the COVID-19 pandemic.
The aircraft were due to begin flying this year, but according to reporting from Reuters the deal has now been pushed back to 2024.
Azul has been a key customer of Embraer keenly purchasing from the domestic supplier rather than seeking other aircraft manufacturers.
Azul started up with a small number of Embraers, building up to 60, comprising around 42 per cent of the airline’s overall fleet.
Azul also has 71 Embraer 195-E2s on order. Azul had originally only ordered 21 of the planes but in December 2018, the airline added another 30 aircraft to the order. In January this year, a further 24 of the type were tacked on, bring the total order for the 195-E2s to 75. Four of the aircraft have already been delivered to Azul.
“For the past 11 years, the E195 has been the foundation of Azul’s business model,” said John Rodgerson, CEO of Azul in January.
“The Embraer E2 has a trip cost that is 14 per cent lower and a unit cost that is 26 per cent lower compared to the E195, and it has 18 additional seats. This significant cost reduction is mostly driven by the E2s fuel efficiency, lower ownership cost, as well as reduced maintenance costs.”
Embraer has sought advisory assistance in an move towards formally requesting Brazilian government support after a deal with Boeing fell through.
Embraer has hired an investment bank, Itau BBA, to advise in talks with the Brazilian Development Bank (BNDES) for government support. The plane manufacturer is seeking credit lines of between $1 billion and $1.5 billion.
The deal with Boeing would have been a huge injection of cash to help shore up its finances during the crisis but has now been left high and dry by the Boeing pull out with Embraer reportedly seeking damages from Boeing as a result.
Embraer has recently announced its Q1 2020 orders and deliveries log, in a briefing delivered to shareholders in the city of São José dos Campos.
According to figures released in the meeting, the company delivered just 14 aircraft over the three months up to 31 March.
“Historically, Embraer seasonally has fewer deliveries during the first quarter of the year,” said the briefing. “In 2020 in particular, the commercial aircraft deliveries in the first quarter were also negatively impacted by the conclusion of the separation of Embraer’s Commercial Aviation unit in January.”
The comments refer to Boeing’s eleventh-hour decision to bail on the joint venture with Embraer, valued at US$4.2 billion. After the news broke several weeks ago, Embraer accused the Chicago-based manufacturer of making “false claims” and stated that it would be pursuing all available remedies.