Company exec to take the helm at Embraer

 - September 11, 2006, 7:09 AM

Embraer has turned to a long-serving company insider to succeed Mauricio Botelho as its president and CEO. Frederico Fleury Curado, currently executive vice president for the commercial aviation market with the Brazilian airframer, will take the reins in April. In accordance with a previously announced transition schedule, Botelho will stay on as the company’s chairman for another two years before retiring.

Curado, who joined the company in 1984, has spent his entire career with Embraer. The 45-year-old Brazilian has previously held management positions in the areas of production, quality, planning and organization development. He received his first degree in mechanical and aeronautical engineering from Brazil’s Aeronautics Technological Institute. He then earned a postgraduate degree in foreign trade from the same school, followed by an international MBA at São Paulo University.

In his current role, Curado has overseen the service entry of the E170/190 series of jets as the company has expanded its airliner offerings to run from 37- to 118-seat capacity. Embraer is now expanding its business aircraft portfolio with the development of the Phenom 100 very light jet and Phenom 300 light jet and the E190-based Lineage 1000 large-cabin product to complement the existing ERJ 135-based Legacy 600.

Next year, Embraer intends to launch two more business aircraft programs–probably a super light jet and a midsize model. It is also preparing to extend its product support infrastructure significantly (see “Embraer’s bizav no longer a one-trick pony”)

Botelho, who was appointed chairman of the board on March 31, joined Embraer in 1995. At the time, the company had just been privatized and, on Botelho’s own admission, faced an uphill struggle to get on a firm financial footing. Its first five-year plan after privatization targeted annual revenues of $1 billion at the end of this period. By 2001 it had far outstripped this goal, banking $2.3 billion.

“We are now solid financially with solid cash, and our investment grading [by international debt rating groups such as Moody’s] is better than Brazil’s,” Botelho told AIN in an interview three weeks before the August 4 announcement of Curado’s appointment.

On March 31, Embraer was restructured to enable wider share ownership and better access to fresh sources of capital. Its shares, which have so far been held largely by a couple of Brazilian pension funds, are now trading on the São Paulo and New York stock exchanges.

The Embraer board wants the company to evolve into a modern public company with dispersed share ownership that is no longer dominated by any one group. Under the new corporate structure, voting rights are limited to 5 percent for each shareholder, regardless of how much stock they hold.

There is also a built-in safeguard against a takeover. Any shareholder whose stake reaches 35 percent of the total stock has to immediately make a global offer to buy 100 percent of the shares. This can be done only with the approval of the Brazilian government, which has retained its golden share.

According to Botelho, Embraer urgently needs freer access to international capital markets because of its new aircraft development programs and product-support investment. These programs will demand more than the $2.3 billion it invested between 1995 and 2005 and over a shorter period of time. The outgoing president and CEO said that the company has neither the cash nor the ability to cover these costs through loans, and so would have found itself in a state of arrested development without the restructuring.

Today, the group has a total workforce of 17,538 people worldwide and a firm order backlog of $10.2 billion.