UPDATE 1-Embraer shares drop as Brazilian Air Force cuts KC-390 order

(Adds Air Force comment, share price movement)

SAO PAULO, Nov 12 (Reuters) - Shares of Brazilian planemaker Embraer SA fell by more than 8% on Friday after the Brazilian Air Force announced it would unilaterally cut to 15 aircraft its order for 28 KC-390 military cargo planes.

Embraer said it was studying legal action as it evaluate the impact the reduction could have on its business and results. The company is the world’s third largest commercial jet maker.

The Air Force said it began negotiating with the company in April to reduce the quantity contracted in 2014 and Embraer had rejected the proposal.

The value of the contract in 2014 was 7.2 billion reais ($1.32 billion). The first aircraft was delivered to the Air Force in 2019 and the fourth last December.

Bradesco BBI analysts said in a note to clients that the cut was negative, but added nevertheless that “Embraer has successfully added new orders from Portugal and Hungary, confirming the interest of other countries in this aircraft.”

Embraer was among the worst performers on the Ibovespa stock market, losing 8.4% in value before recovering in late afternoon to 21.80 reais a share, 5% down for the day. ($1 = 5.4592 reais) (Reporting by Paula Arend Laier and Carolina Mandl; editing by Jonathan Oatis)