It was early April 2020, the COVID lockdowns in the United States and globally had just begun, and the world was facing an unprecedented crisis of unknown proportions. Economies and production facilities were shutting down to stem the spread of the virus, causing companies across the globe to shift their strategies and business models. The entire aviation industry faced a historic disruption and it was no different for Embraer Executive Jets manufacturing facility in Melbourne, Florida.
At the same time, contraction in financial markets was constricting lending capacity and access to working capital. Knowing that pandemic-related restrictions would impact Embraer’s cash flow, AirFinance Leasing, LLC, an EXIM Qualified Advisor headquartered in Virginia Beach, Virginia, contacted the company to explore EXIM's COVID-19 relief measures for U.S.-based businesses.
A Creative Solution to Resolve a Complex Problem
Working together, AirFinance, Embraer, Apple Bank for Savings of New York, and EXIM put together a public-private partnership team to find a solution.
The team devised a unique solution for Embraer under EXIM’s Working Capital Loan Guarantee program, providing an inventory-only credit facility that enabled Embraer to borrow against all inventory in various stages of production that was either earmarked for export or potentially exportable in the future. The financing provided access to working capital that allowed Embraer to maintain normal operations in a period of great uncertainty and almost frozen capital markets – sustaining both their exports and their workers.
“The essential and important role EXIM took in this transaction was to take the long view, including the longevity of the company and the strength of their management team. EXIM’s credit analysts understood that if they could provide bridge financing support through the period of uncertainty, Embraer’s management team would come out strong on the other side,” said AirFinance Managing Partner Kirsten Bartok. “If not for access to capital through agencies like EXIM, especially during economic crises - commerce would freeze, and companies would have to downsize.”
Dedicated to Making Exporters More Competitive
Bartok also emphasized the impact EXIM’s financing will have on the company’s global competitiveness.
“One result of EXIM support is that Embraer has continued to expand its manufacturing operations in the United States because they have seen this support in multiple areas over the years,” she said.
Finally, Bartok praised the process of working with EXIM: “These are extremely experienced credit professionals who advocated for this innovative approach to financing and they were always there to help. We called these guys on weekends; we called at night – the team was dedicated to U.S. exports and making us more competitive.”
Through this collaborative approach and teamwork, Embraer is now in a period of growth and recovery proving its resilience and ability to overcome challenges. The company was able to manage the impacts of the pandemic quickly and proactively to not only navigate through the crisis, but to be ready to thrive in the wake of the rebound of the business aviation market.
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