UPDATE 2-Embraer wins U.S. Air Force deal for Afghan planes

Wed Feb 27, 2013 8:00pm EST

By Jim Wolf and Brad Haynes

WASHINGTON/SAO PAULO Feb 27 (Reuters) - Brazil's Embraer SA won a U.S. Air Force deal on Wednesday to supply 20 light attack planes for counterinsurgency missions in Afghanistan, tightening U.S.-Brazilian defense ties after a politically charged bidding process.

Embraer and its privately held partner, Sierra Nevada, beat out U.S.-based Hawker Beechcraft for the $428 million deal, the Brazilian planemaker's first with the U.S. armed forces.

With the "seal of quality" from the world's biggest defense spender, the head of Embraer's defense unit Carlos Aguiar said he anticipated more demand for the single-engine turboprop Super Tucano from potential clients in the Middle East and Southeast Asia.

"We know other countries were waiting for the result," Aguiar said in a telephone interview. "With the United States itself, as we show we can deliver on the contract, this order can definitely grow and there will be other needs we can meet."

The contract was also good news for Chicago-based Boeing Co , which is bidding to overhaul Brazil's Air Force with more than 36 new fighter jets worth at least $4 billion, in a closely watched race against France's Dassault Aviation and Sweden's Saab.

"This is obviously a very good development for Boeing. It's the best thing that's happened to them in months (in the fighter jet race)," said a senior Brazilian official on condition of anonymity. The official did not elaborate.

Brazilian officials had expressed dismay last year, when the U.S. scrapped the Afghan contract originally awarded to Embraer in December 2011. Hawker challenged that process in court and political fallout from the Kansas-based company losing out to a Brazilian one seeped into the U.S. presidential campaign.

After Embraer clinched the rebid on Wednesday, U.S. Deputy Defense Secretary Ashton Carter called Brazil's Defense Minister Celso Amorim to congratulate him on the results.

Amorim called it a "big victory" for Brazilian industry that will open new business opportunities for Embraer, according to a statement from the ministry.

For Hawker, which emerged from a Chapter 11 restructuring this month, the lost contract is another setback on the road to recovery.

"We will meet with the (U.S. Air Force) for a full debrief of the award and determine our next steps forward at that time," Nicole Alexander, a company spokeswoman, said in an emailed statement.

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