Embraer Inks Pact With China's Lanzhou Aviation For Freight Conversion Deal

Embraer S.A. ERJ inked a pact with China's Lanzhou Aviation Industry Development Group to convert 20 E-Jets into freighters.

Financial terms of the deal were not disclosed.

The companies inked a letter of agreement, accelerating the introduction of E-Jet first-generation freighters to the Chinese market. 

Following the transaction, Lanzhou becomes the launch customer for Embraer's Passenger-to-Freight (P2F) conversion in China.

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"The opportunity in China had a significant influence during the decision-making process of the launch of our P2F program," said Embraer CEO Arjan Meijer.

"It is a market with increasing demand for cargo aircraft to accommodate the tremendous growth of E-commerce trade and the consequent evolution of the logistics industry," Meijer added.

On June 20, the company received a contract worth $403.4 million from American Airlines Group, Inc. AAL for seven new E175s. Embraer has also bagged an order of six Embraer E195-E2 aircraft from Spanish carrier Binter.

Embraer forecasts a market demand for 700 E-Jet freighters over the next 20 years. 

The Chinese market is estimated to need 240 freighters of this size, accounting for 34% of the global total, powered by demand from the e-commerce and logistics sectors.

Price Action: ERJ shares were down by 3.55% to $16.03 on Tuesday.

Image: Embraer.com