In a statement issued by the Brazilian Air Force last Wednesday, it was reported the intention to renegotiate the contract with Embraer, to reduce the number of KC-390s to acquire and slow down their delivery rate.
The economic impact derived from the global crisis of Covid-19 would be the cause of the budget reduction of the Brazilian Air Force (FAB for its initials in Portuguse), which leads to cut the order of the KC-390s.
Press release
The health crisis that the world has been facing since the end of 2019 has had repercussions on the world economic situation, with impacts also on the Brazilian fiscal and budgetary situation. As a result, the resources assigned to the defense sector have been subject to restrictions that directly limit the strategic projects of the Armed Forces.
In this context, the Brazilian Air Force, maintaining its commitment to the budgetary goals and in line with the current scenario, decided to review the paths to follow in the continuation of the KC-390 aircraft production contract with Embraer.
Due to the complexity of this issue, it is necessary to consider the various aspects that directly impacted on this decision making.
The main problem concerns the projected figure of 28 aircraft under the current contract, which, at this time, has proven to be higher than the Force’s budgetary reality, both for procurement and for logistical support throughout time.
Since the beginning of its operation, the KC-390 aircraft fleet has been showing exceptional availability and dispatch rates, resulting in a much greater capacity in volume and agility in the transport of cargo and personnel, factors that have been successfully observed during the different missions carried out throughout 2020 and 2021.
Thus, considering the current socioeconomic situation and the high performance indices of the units already delivered, the Air Force Command understands that the contractual scope must be re-evaluated, with a focus on better adapting production and public interests.
It is worth mentioning that, even in an economically stable scenario, revaluations and contractual changes frequently occur in the international aviation market, as it is a dynamic area with great participation.
In summary, after a series of budget analyzes and operational studies started in 2019, based on current legal provisions, the Aeronautical High Command determined the start of the contract negotiation process with Embraer. The objective will be to reduce the total number of aircraft delivered, based on the current contract, and seek a production rate of 02 aircraft per year, factors considered adequate considering the operational, logistical and financial aspects.
Finally, the Brazilian Air Force reinforces that it considers Embraer as a strategic partner in the implementation of solutions and development of technological products, which have been fundamental for the full fulfillment of its constitutional mission. This fact is evident in the joint projects that are underway, such as the study for the design of unmanned aerial vehicles and the conceptual development of a new light transport aircraft.
Brasilia, May 26, 2021.
Aeronautical Social Communication Center
The FAB already has 4 Embraer KC-390s in its inventory, and it was due to receive another 2 or 3 this year. The scheduled delivery rate was 3 or 4 aircraft per year (one year 3, another 4) until 2027, totaling 28 units.
Under the arrangement sought by the FAB, the order could be reduced to 18 units, or more than 18 but less than 28, in turn extending the delivery period beyond 2027.
In such a way that Embraer will have to redouble commercial efforts to compensate with export orders for the aircraft that the FAB does not want.
Undoubtedly, the supply chain for the KC-390 program, of which FAdeA is part, will be waiting for the results of the negotiations and how it will impact their production quotas.
