Photo: Embraer
Embraer Executive Jets could suffer because of Brazil's booming economy and soaring value of the real. The Brazilian currency has gained 36 pct since january 2009, notes John Lyons in Tuesday edition of the Wall Street Journal. The currency is so strong that a can of coke actually costs more in Sao Paulo than in New York city, Lyons notes. "Office space in Sao Paulo is suddenly more expensive than Manhattan," he writes.
The real's strength comes when the US dollar has become anemic, thereby shrinking the export revenues of Brazilian firms and shaving their profit margins.
"Some executives in Brazil fret tht the cost of doing business has risen so fast the their country may be unable to become the manufacturing power it has aspired to be for generations," writes Lyons. Most assuredly, this is on the minds of Embraer CEO and president Fred Curado and Ernie Edwards, president of its executive jets division.
The real's strength is putting upward pressure on the price of the $4-million Phenom 100, the hot selling light jet that has syphoned off many Citation sales from Cessna because of its perceived bargain price. With the rise of the real, Embraer may have to increase its sticker prices. That would dampen much of the market's enthusiasm for Brazilian business aircraft, but it would be welcome news in Wichita.
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