Embraer to decide on new jet in 12-18 months-report

SAO PAULO Wed May 25, 2011 8:26am EDT

Frederico Curado, CEO of Brazilian aircraft manufacturer EMBRAER, gestures as he speaks during the Reuters Latin American Investment Summit in Sao Paulo March 31, 2011. REUTERS/Paulo Whitaker

Frederico Curado, CEO of Brazilian aircraft manufacturer EMBRAER, gestures as he speaks during the Reuters Latin American Investment Summit in Sao Paulo March 31, 2011.

Credit: Reuters/Paulo Whitaker

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SAO PAULO (Reuters) - Embraer (EMBR3.SA)(ERJ.N), the world's biggest regional aircraft maker, will take more than one year to decide whether to build a new family of jets, Chief Executive Officer Frederico Curado told newspaper Valor Economico on Wednesday.

Embraer could take as many as 18 months to decide on the future of an aircraft with 120 to 150 seats, Curado told the newspaper. In an interview with Reuters on March 31, Curado said the decision would come before the end of this year.

"We have to make a decision in the short to medium term, and that would be something between 12 and 18 months," Curado told Valor. The Sao Jose dos Campos, Brazil-based company is a global leader in 70-to-120-seat aircraft.

Analysts say Embraer's product development for commercial jets remains almost stalled even as competitors have pushed forward. The company, however, is making quick progress in the development of business jets and defence aircraft.

In the opinion of some investors, Embraer lacks a comprehensive offering of planes in the growing large-jet market, which could hinder its ability to win orders from airlines that are willing to buy aircraft of multiple sizes from one provider.

Embraer recently tapped engineer Luiz Carlos Affonso as vice president for new businesses, including the design of new aircraft, Valor said.

Affonso headed Embraer's executive aviation unit for years, helping develop the Phenom model.

The concern behind developing a new line of planes is more related to competitiveness, Curado told Valor. The company, whose revenue is mostly pegged to the U.S. dollar, has suffered over the past two years with a surge in the value of the Brazilian real.

Embraer is hurt when the real strengthens because about 30 percent of costs and about 40 percent of total expenses are linked to the currency.

Calls to an Embraer spokesman to comment on the Valor story were not immediately answered. (Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn)

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