Brazilian planemaker Embraer (EMBR3.SA) is returning to China with a deal to convert passenger jets into freight aircraft with a local partner in the northwestern city of Lanzhou, the company said on Wednesday.
Anticipation of new business in China has been high since President Luiz Inacio Lula da Silva's trip to China in April. At the time, he publicly backed Embraer's efforts to return to a market where it has struggled to find new business since the 2016 closure of a joint venture in Harbin.
Some had expected a deal for aircraft sales to a Chinese airline. Instead, Embraer announced during the Paris Air Show that it had signed a letter of agreement with Lanzhou Aviation Industry Development Group for 20 E190F and E195F passenger-to-freight conversions.
"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," said Embraer's commercial aviation chief executive, Arjan Meijer.
A day earlier, Embraer announced fresh orders from American Airlines (AAL.O) and Spanish carrier Binter for commercial aircraft totaling about $1 billion at list prices.
Financial details of the Lanzhou deal were not disclosed.
Embraer said in a statement that the companies intend to cooperate on establishing conversion capability in Lanzhou to boost the introduction of first-generation E-Jet freighters to the Chinese market.
Embraer forecasts demand for such jets to reach 700 aircraft over the next 20 years, with China responsible for 240 of them, and said the deal with Lanzhou was a "strong indicator" of such demand.
The Brazilian firm, the world's third-largest planemaker after Airbus (AIR.PA) and Boeing (BA.N), currently has 85 E-Jets flying in China with carriers Tianjin, Hebei, Beibu Gulf and Colorful Guizhou.
