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LatinNews Daily - 16 July 2018

In brief: Brazil

* Brazilian aerospace conglomerate Embraer SA, the third largest producer of civil aircraft in the world, has forecasted that global demand for new aircraft with a capacity of up to 150 seats, such as those produced by the firm, will reach 10,550 in the next 20 years, a business that would be worth US$600bn. According to Embraer, this increase in demand will come as a result of the increase in the in-service fleet from 9,000 aircraft to 16,000, an increase that will be generated mostly by air travel market growth (65%) but also by aircraft replacements (35%). Nonetheless Embraer’s president & CEO, John Slattery, warned that “past performance is no guarantee of future results” because “we are now warming up for the next period of higher costs, with pressures on yields likely to continue unbated”. Embraer’s forecast comes after on 5 July the firm announced that it had established a “strategic alliance” with US aviation giant Boeing to form a new joint venture in which Boeing will hold an 80% stake and Embraer the remaining 20%. The two companies signed a non-binding agreement which would benefit Embraer with greater access to global markets and allow Boeing to compete in the market for smaller planes. The Brazilian government, which holds a voting share in Embraer, is expected to approve the deal despite some public pressure to reject it.