Embraer admitted that it is discussing with Lufthansa about a possible order for new commercial aircraft, but denied that the matter is sufficiently relevant to motivate a statement to the stock market.
The statement was published on Friday after Lufthansa CEO Carsten Spohr revealed at a symposium that the company is interested in the Brazilian manufacturer’s commercial jets. As it is listed on the stock exchange, Embraer needs to communicate relevant information in order to avoid a possible fluctuation in the value of its shares.
In response to the Securities and Exchange Commission, Embraer stated that “it maintains a constant sales effort towards its customers. In the context of this effort, the Company has been discussing with Lufthansa the potential acquisition of aircraft. Such discussions are not in a stage advanced, and there is no firm commitment to make such sales at this time.”
Due to the disclosure of Spohr’s statement in several media outlets, Embraer’s shares had a great appreciation on February 17th.
The Lufthansa group, which is going through a serious financial crisis due to the effects of the COVID-19 pandemic, has undertaken a fleet reduction strategy focused on early retirement of less efficient aircraft such as the A380, A340 and 747 four-engine aircraft.
The company’s CEO also acknowledged that Lufthansa is negotiating with Airbus and Boeing to replace part of its current orders for smaller capacity aircraft, but did not disclose which models are being analyzed.
Due to lower demand expectations in the coming years, Lufthansa sees small commercial jets as an outlet to operate routes with a more adequate occupancy rate. It is in this scenario that Embraer’s E2 aircraft line can fit.
Currently, the German group has 43 Embraer aircraft of the E190 and E195 models, but also 105 A319 jets with an average age of 16 years and whose operational efficiency is much lower than the E2s. Swiss, part of the group, on the other hand, operates the A220, Bombardier’s former C Series jet, which is the main competitor of Embraer’s planes.