The Export-Import Bank of the United States (US Exim) has inked a US$97.2mn working capital guarantee to boost the country’s executive jet exports.
The export credit agency (ECA) is providing 90% cover for a one-year, revolving working capital loan from Apple Bank for Savings to a US-based subsidiary of Brazilian planemaker Embraer.
AirFinance Leasing acted as the administrative servicer of the facility, marking the first time for the US Exim qualified advisor to participate in a working capital guarantee financing by the ECA.
The funding will be channelled into Embraer Executive Aircraft’s manufacturing facility in Florida, and, according to US Exim, will support around US$211mn in export sales.
US Exim adds that it will prop up an estimated 800 jobs, mostly in Florida, but also in other states such as Georgia and Texas, where related supply chain operations take place.
The ECA notes in a statement that the deal was needed to sustain Embraer’s US exports and meet its working capital needs.
“Pandemic-related restrictions have prevented the company’s customers abroad from taking delivery of their pre-ordered aircraft, which has negatively impacted its revenue stream,” US Exim adds.
According to a Fitch Ratings report released in April, Embraer is expected to see executive jet deliveries fall by at least 15% in 2020, meanwhile commercial jet deliveries are forecast to plunge by 50% due to a rise in aircraft deferrals.
Having been largely absent from the aviation sector in the past few years, the Embraer deal is the latest sign that ECAs will play an active role in the industry’s coronavirus recovery efforts.
Elsewhere in the world, after months of appeals for state intervention by Toulouse-based giant Airbus, the French government announced in June that it would bolster its export credit guarantee scheme as part of a €15bn rescue package for the aerospace sector.
Airbus had previously been calling for a boost in export credit support for its customers – such as airlines – which have been severely impacted by the pandemic.
Job losses have rocked the sector in the wake of the pandemic, and a Euler Hermes report released in June said that it expected airlines’ aggregate revenues to fall by US$310bn, to US$525bn.
Airlines have in turn moved to defer or even cancel orders to minimise outgoing costs, which has hit the pockets of manufacturers such as Airbus, Boeing and Embraer.
Fitch Ratings analyst Craig Fraser told GTR in June that demand for Boeing deliveries is likely to be down by at least a third this year, for instance. Meanwhile another analyst at Fitch, Tom Chruszcz, predicted that Airbus deliveries will fall by at least 25%.