Seen As Financial Consolidation Ahead Of Restructuring

Europe's largest aerospace manufacturer has sold it's 2.12 percent stake in Brazilian aircraft manufacturer Embraer for $163 million.

In a statement to the Financial Times, EADS said it had earmarked its investment in Embraer for sale as the group focused "its attention on core matters and projects that will provide future growth opportunities."

EADS warned last month of operating losses for 2006 despite near-record orders and deliveries. The company blamed its losses on costs related to delivery delays for its flagship A380 program.

The company has also hinted it may go back to the markets to raise capitol to pay for the development of its upcoming A350 XWB, seen as competition for rival Boeing's 787 Dreamliner.

Industry observers view this latest move by EADS as an effort to consolidate its finances ahead of an upcoming massive restructuring, the details of which are to be announced February 20.

Embraer has seen a large sell off of its stock of late, with several leading shareholders shedding stock including Dassault Aviation, the Brazilian state development bank and Brazilian pension funds Sistel and Previ.

In all, shareholders dumped nearly 12 percent of the company's stock, though only EADS sold its entire stake.

Embraer is the world's leading manufacturer of regional jets up to 120 seats. EADS said it remains "fully committed" to its partnership with Embraer despite the stock sale.

FMI: www.airbus.com, www.embraer.com