Embraer creates new division, eyes Boeing, Airbus

Defense News: SAO PAULO, April 1 (Reuters) - Brazil's Embraer (EMBR3.SA) (ERJ.N) said on Thursday it had created a new division for commercial aviation, adding to speculation that it is considering building larger planes that would put it in direct competition with Boeing (BA.N) and Airbus (EAD.PA).

The division, called New Programs for Commercial Aviation, will be headed be Mauro Kern, whose previous job title was Executive Vice President for the Commercial Aviation Market. That division will now be run Paulo Cesar Silva, the company said in a statement.

The revamp of Embraer's organizational structure comes as speculation mounts that the Brazilian manufacturer may look to build larger planes than the small and mid-sized jets that helped make its name.

Embraer Chief Executive Frederico Curado has said the company will eventually have to decide whether to build bigger models or remain focused on the 50- to 120-seat niche, where its main rival is Canada's Bombardier (BBDb.TO).

But Curado has stressed that the company will make that leap only if it can come up with technological advances that justify such a large investment.

If it does, it would begin competing with U.S.-based Boeing and Europe's Airbus, the world's two biggest airplane makers. Curado's predecessor as CEO, Mauricio Botelho, was wary of moving into the segment of large airliners and liked to refer to Boeing and Airbus as the "big dogs."

Embraer's shares were down 0.86 percent at 10.43 reais in late afternoon trading in Sao Paulo, while the benchmark Bovespa index .BVSP was up 1.06 percent. (Reporting by Todd Benson; Editing by Gary Hill)