Embraer chief makes surprise exit as commercial jet boss rises

Embraer chief makes surprise exit as commercial jet boss rises

DALLAS: Embraer said Frederico Curado will step down as chief executive officer after nine years at the helm, in an unexpected departure from the Brazilian planemaker as it faces stepped-up competition in the regional jet market.
The company’s commercial aviation boss, Paulo Cesar de Souza e Silva, will succeed Curado, 54, and the transfer of executive duties will take place next month, the company said in a statement on Thursday. A full transition will occur by the end of the year.
The executive shift catches the Brazilian planemaker at a critical time, as it works to certify the first of its E-Jet E2 family of jets. The upgraded regional aircraft face an array of new competitors from Bombardier’s C Series to Mitsubishi’s MRJ and China’s Comac C919.
"With the E-2 just flying, it’s pretty extraordinary,” Richard Aboulafia, an aerospace analyst with Teal Group, said of the leadership change.
Curado’s exit is part of a "planned transition,” said Saulo Passos, a spokesman for Embraer.
Stock drop
The Sao Jose dos Campos, Brazil-based manufacturer is the latest aerospace company to revamp its leadership amid market challenges and heightened pressure from new entrants.
Spirit AeroSystems Holdings, Boeing’s largest supplier, announced on Wednesday that CEO Larry Lawson is retiring at the end of July. New leaders have taken the reins of Boeing, Bombardier, Rolls-Royce and United Technologies in the last two years.
Embraer has tumbled 39 per cent this year compared with an 18 per cent gain on Brazil’s benchmark Ibovespa index. A strengthening currency in the South American country may cause some "cost headwinds” this year, Curado said in April. The real’s 17 per cent advance against the dollar is the biggest this year among 16 major currencies tracked by Bloomberg.
Momentum shift
The company saw strong sales gains in the last decade as major US airlines shifted more flying to regional affiliates and then traded out cramped 50-seaters for Embraer’s more spacious jets. But Embraer saw market momentum shift as United Continental Holdings struck deals with Boeing this year and Delta Air Lines snubbed the E2 for Bombardier’s C Series planes.
During the first quarter, Embraer didn’t record any jetliner sales, according to data compiled by Bloomberg Intelligence. It broke the drought when Alaska Air Group’s Horizon Air subsidiary ordered 30 E175 jets in April.
The Brazilian planemaker’s firm-order backlog stood at $21.9 billion at the end of the first quarter, compared with $20.4 billion a year earlier and $22.5 billion in backlog at the end of 2015.
Corruption probe
Embraer may be hit with "substantial” fines in the US as it moves to resolve a probe involving the Foreign Corrupt Practices Act, the company said earlier this year.
High-ranking executives including Curado knew sales consultant Elio Moti Sonnenfeld was paying bribes tied to the sale of aircraft in the Dominican Republic, the Wall Street Journal reported in March, citing official summaries of Sonnenfeld’s statements.
The company said it was unable to comment because the article was "based on allegations that apparently were leaked from a confidential statement from a defendant in a lawsuit that is under seal in Brazil and not available to the company.” Embraer said it was cooperating with authorities.
Curado’s departure was unrelated to any official probe, said Passos, the company spokesman.
"There is no connection between any government investigation and the transition that we are starting,” Passos said. — Bloomberg News