* Pool program with Brazil carriers is Embraer's biggest yet
* Services income to help offset declining E-Jet production
* Embraer plans to double service revenue share in five yrs
SAO PAULO, Feb 7 Embraer SA, the
world's largest maker of regional jets, said on Thursday it
signed a $400 million service contract with Brazilian airlines
Azul and Trip, bolstering service revenue to offset its slowing
commercial assembly line.
Under the deal, the largest of its kind that Embraer has yet
signed, the planemaker will stock and distribute spare parts for
one of its biggest clients, expanding a five-year-old agreement
The so-called pool program, which covers 56 percent of
Embraer's regional E-Jets, is meant to lower up-front inventory
costs for the 33 participating airlines while guaranteeing
steady revenue for the manufacturer.
Embraer is cutting E-Jet production by as much as 15 percent
this year, sapping revenue from its core business after three
years of weak demand for new aircraft.
But the company plans to double the share of services in its
regional jet revenue within five years, Luiz Hamilton Lima, vice
president of commercial aviation services, said in an October
interview. Service revenues only made up about 10 percent of
commercial jet revenue in 2010 and 2011.
Regional carriers Trip and Azul Linhas Aéreas Brasileiras
merged in May to form Brazil's third-largest airline group.
Together they will have 97 E-Jets covered under the pool program