June 9, 2016 / 11:32 PM / 2 years ago

UPDATE 2-Brazil's Embraer names commercial aviation chief as new CEO

(Adds comment from Embraer representative)

By Brad Haynes

SAO PAULO, June 9 (Reuters) - Brazil’s Embraer SA will replace its chief executive with the current head of its commercial aviation division next month, the company said on Thursday, in a surprise decision.

Paulo Cesar Silva will take the reins of the world’s third-largest commercial aviation firm after nearly two decades at the company, including six years in charge of its core airliner business, overseeing development of the next-generation E-Jet family.

Frederico Curado, who has run the company for more than nine years, will give up his executive role in July and contribute to a transition through the end of 2016, Embraer said in a statement.

“After more than 32 years at Embraer, with 22 of them on the executive board, I am ending a cycle in my career and I will focus on other professional and personal activities,” Curado said in the statement. “With Paulo, Embraer is in excellent hands.”

Three analysts who cover the company said they had been caught off guard by news of the transition. They asked not to be identified, citing protocol at the institutions where they work.

Under Curado, Embraer has taken command of the regional jet market, with E-Jets dominating the 70- to 100-seat segment and pushing into the market for up to 130-seat aircraft, making trouble for Bombardier Inc’s new C Series.

The company also expanded into executive aviation with a lineup of new small and midsized jets, as well as more intensive defense contracting, including the launch of the KC-390 military cargo jet, the biggest plane ever made in Latin America.

In recent years, Embraer’s defense division ran afoul of anti-corruption legislation in the United States, where the company has listed shares.

U.S. and Brazilian authorities began investigating Embraer in 2010 for allegedly bribing officials in the Dominican Republic to secure deals for commercial and defense aircraft.

A sales consultant told Brazilian prosecutors that he believed Embraer’s top executives, including Curado, knew of illicit payments related to that deal, the Wall Street Journal reported in March.

Embraer officials declined to comment directly on the accusation, pointing out it was apparently leaked from confidential testimony in a legal case in Brazil, the details of which were not available to the company.

Curado was not named as a defendant in a 2014 criminal case in Brazil brought against former Embraer executives involved in the deal. An Embraer representative said Curado’s departure was entirely unrelated to the graft investigation. (Additional reporting by Cesar Bianconi and Paula Laier; Editing by Daniel Flynn and Peter Cooney)

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