* Announcement comes amid worries over commercial aircraft
* Embraer focusing on defense to diversify revenue stream
* Deliveries of V2500-E5 engine expected by 2013-statement
(Adds background, share performance in paragraphs 3-5)
SAO PAULO, July 25 Embraer (EMBR3.SA)(ERJ.N),
the world's biggest maker of regional aircraft, chose
International Aero Engines as engine supplier for its military
transport plane KC-390, signaling that the company is moving
ahead in its venture into defense within schedule.
Sao Jose dos Campos, Brazil-based Embraer said in a
statement on Monday that first deliveries of the V2500-E5
engine should begin in 2013. IAE is a multinational consortium
formed by Rolls-Royce (RR.L), United Technologies (UTX.N) unit
Pratt & Whitney and the Japanese Aero Engine Corp, among
"The choice of the first suppliers is key for us to start
the project in this new, more advanced phase," Luiz Carlos
Aguiar, head of Embraer's defense unit, said in the statement.
Embraer is betting on defense as geopolitical events lead
Brazil and other countries to beef up security to protect
extensive natural resources. Aguiar, Embraer's former chief
financial officer, took over the defense unit in December to
boost defense revenue from about 10 percent of total sales.
Chief Executive Frederico Curado told Reuters in a recent
interview that he wished to see revenue from defense at about
20 percent in coming years.
Still, the engine announcement comes as investors wait for
Curado's decision on whether Embraer plans to build a new
family of commercial jets. The decision is key because Embraer
lacks a comprehensive offering of planes in the large
commercial jet market -- which hinders its ability to win
orders from airlines looking to buy aircraft of multiple sizes
from one provider.
Deliveries of the first defense cargo airplane, known as
the KC-390, are expected by the end of 2015, and analysts have
predicted prices of between $80 million and $100 million per
Voting shares of Embraer fell 1.2 percent to 11.22 reais in
Sao Paulo on Monday, while its U.S.-traded shares fell for a
second straight session, shedding 0.3 percent to $29.58.
(Reporting by Brad Haynes and Guillermo Parra-Bernal; Editing
by Gerald E. McCormick and Tim Dobbyn)