Airbus deal with LOT underscores role of geopolitics in aviation industry

Geopolitical dynamics played a visible role in a major aircraft deal announced at the Paris Air Show, where Airbus (OTCPK:EADSF) (OTCPK:EADSY) secured a major order from Poland’s LOT Polish Airlines and displaced longtime supplier Embraer (NYSE:ERJ) in the process, Bloomberg News reported Monday.

LOT committed to purchasing 40 Airbus (OTCPK:EADSF) (OTCPK:EADSY) A220 jets, with the option to increase the total to 84. Based on estimates from aviation consultancy Ishka, the deal is valued at up to $2.7 billion after customary discounts.

The decision marks a notable shift for LOT, which has historically operated fleets comprised largely of Boeing (NYSE:BA) and Embraer (NYSE:ERJ) aircraft. The airline now plans to retire its Brazilian-built jets, a move Embraer (ERJ) publicly criticized as politically influenced.

The company recognizes the unique geopolitical moment, Embraer (ERJ) said in a statement following the announcement, adding that maintaining fleet continuity would have delivered significant savings to LOT.

The political overtones were unmistakable at the Paris ceremony, attended by officials from Poland, France and Canada, which is home to the A220 assembly line. French Transport Minister Philippe Tabarot spoke at the event, and Poland was represented by both a government minister and its ambassadors.

The broader geopolitical backdrop may also have worked against Embraer (ERJ). Polish officials reportedly viewed Brazilian President Lula da Silva’s recent trip to Moscow unfavorably, given Poland’s staunch support for Ukraine in the face of Russia’s ongoing war.