The deal, which will improve company’s liquidity position, is an extension of a $650m syndicated credit operation announced in October 2022.

The Brazilian firm obtained a revolving credit facility of $650m in October of 2022, as well as a credit transaction guarantee of $100m by JP Morgan and UK Export Finance to finance suppliers.

“The extension of a significant syndicated credit line reinforces Embraer’s liquidity for the next five years, providing important support for our long-term strategy. Our partnership with strong and marquee financial institutions reinforces Embraer’s credit quality,” highlighted Antonio Carlos Garcia, CFO, Embraer.

The syndication was led by PNC Bank, Crédit Agricole, Citibank, and with the participation BNP Paribas, Mizuho, Bank of America, Sumitomo Mitsui Bank Corporation, Natixis, JP Morgan, MUFG, Santander, Banco do Brasil, Commerzbank, Morgan Stanley, Bradesco, and Goldman Sachs.

The company said the extension of the credit line will be used by Embraer’s subsidiaries in the US and the Netherlands.

Earlier this year, S&P Global Ratings raised Embraer’s rating from “BB+” to “BBB-” and maintained a stable outlook citing the company’s strong cash generation amid higher aircraft deliveries. 

Embraer delivered 27 executive jets in the second quarter of 2024 up from 18 in the first quarter of 2024 but lower than 30 in the same period last year. The company’s backlog stayed flat at $4.6bn in comparison with the first quarter of 2024.

Embraer’s average loan maturity at the end of first quarter of 2024 decreased to 4.4 years compared to 4.6 years in the preceding quarter of last year. The term structure of loans was 96% in long-term contracts and only 4% in short-term ones.

In terms of cost of loans, the company’s cost of USD denominated loans decreased to 6.19% per annum in 1Q24 from 6.33%pa in 4Q23, while the cost of Brazilian real-denominated loans decreased to 6.69% compared to 7.11%, respectively.

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The business aviation broadband connectivity service provider said that the decision to make the prepayment will permanently reduce Gogo’s debt and strengthen the company’s financial foundation.

As a result of the prepayment, Gogo will reduce outstanding debt to $612.3m. The transaction will also reduce the firm’s cash by around $4.5m. As of April 28th, 2023, Gogo had about $188m in cash and an undrawn loan of $100m.

Oakleigh Thorne, chairman and CEO, Gogo said: “As we execute on our strategy and deliver significant free cash flow growth in line with our long-term guidance, Gogo will continue to pursue a balanced capital allocation strategy focused on maintaining adequate liquidity, maintaining an amount of leverage appropriate for the economic environment and enhancing shareholder value.”

He added that investing in initiatives such as Gogo 5G and the firm’s Low Earth Orbit (LEO)-based Global Broadband remains a priority too.

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