UPDATE 1-Embraer shares drop as Brazilian Air Force cuts KC-390 order

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(Air Force adds comment, share price movement)

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SAO PAULO, Nov 12 (Businesshala) – Shares of Brazilian planmaker Embraer SA fell more than 8% on Friday after the Brazilian Air Force announced it would unilaterally sell 28 KC-390 military cargo planes. Will cut 15 planes in its order.

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Embraer said he is studying the legal action as it evaluates the impact of the reduction on his business and results. The company is the third largest commercial jet manufacturer in the world.

The Air Force said it began talks with the company in April to reduce the quantity it contracted in 2014, and Embraer rejected the offer.

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The value of the contract in 2014 was 7.2 billion riyals ($1.32 billion). The first aircraft was given to the IAF in 2019 and the fourth in December last.

Bradesco BBI analysts said in a note to customers that the cut was negative, but still noted that “Embraer has successfully added new orders from Portugal and Hungary, confirming the interest of other countries in this aircraft.”

Embraer Ibovespa was among the worst performers in the stock market, falling 8.4% in value to 21.80 per share, down 5% for the day, before recovering in the late afternoon. ($1 = 5.4592 Rees) (Reporting by Paula Arend Laer and Carolina Mandal; Editing by Jonathan Otis)

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