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Brazil's Embraer looks to shock Lockheed with price of cargo jet

Luiz Carlos Aguiar, the head of Embraer's Defense and Security unit, speaks during an interview with Reuters in Sao Paulo January 13, 2012.
Luiz Carlos Aguiar, the head of Embraer's Defense and Security unit, speaks during an interview with Reuters in Sao Paulo January 13, 2012.

By Brad Haynes

RIO DE JANEIRO (Reuters) - Brazilian planemaker Embraer SA is looking to shock rivals with the price of its KC-390 military transport plane when it starts booking firm orders within the next 12 months, according to a senior executive.

Luiz Carlos Aguiar, the head of Embraer's defense unit, made clear in an interview ahead of the LAAD defense show that starts in Rio de Janeiro on Tuesday, that the company's strategy was aggressive.

"In terms of price, we're going to make the competition uncomfortable. They're going to be astonished," he said, but declined to be more specific on the price of the cargo jet under development, citing various options that will affect costs.

The confident tone highlights Embraer's growing ambitions for the KC-390, which aims to replace aging versions of Lockheed Martin Corp's C-130 Hercules. The Brazilian aircraft received a vote of confidence last year when Boeing Co agreed to joint sales.

Embraer is expected to lay out an expanded assessment of the potential market for the airplane at a news conference later on Tuesday. The company initially estimated global demand for 700 new military cargo planes by 2025 worth more than $50 billion.

Last month, Brazil's air force wrapped up the KC-390's critical design review, finalizing details of its layout and performance. It also allowed the planemaker to move ahead with making prototypes and formalizing sales.

Embraer expects to book its first firm orders by the first quarter of next year, Aguiar said. The company already has letters of intent for 60 planes from Brazil, Colombia, Portugal, Argentina, Chile and the Czech Republic.

More than 70 countries are potential customers for the KC-390, Aguiar said, adding that Embraer's traditional strength in Latin America, Africa and South Asia will continue to guide its commercial strategy on the cargo jet.

(Additional reporting by Roberta Vilas Boas in Sao Paulo; Editing by Todd Benson and Maureen Bavdek)

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