A combination of the delivery of fewer planes and a surge in spending ahead of the deal which will see Boeing take an 80 per cent stake in the commercial jets arm of the Brazilian planemaker has resulted in Embraer posting a US$42.5 million loss for the first quarter, 2019. Revenue fell 26 percent to US$281 million in the commercial aviation section as a result of the delivery of only 11 jets as opposed to 14 for the same quarter last year, while revenue for the whole company fell 14.1 per cent.
Despite the weak results and a fall of US$512 million in available cash, Embraer remains positive for its 2019 delivery forecast and is looking to boost numbers over the coming quarters. In all, Embraer hopes to deliver between 85 and 95 passenger jets and between 90 and 100 executive jets. In 2018 90 passenger and 91 executive jets were delivered.
The crash involving one of its yet-to-be-launched KC-390 military planes cost the company many millions of dollars, weak demand for executive jets and reduced deliveries of commercial jets created a considerable burden. However, the selling of 150-seat commercial jets has been profitable for several consecutive quarters, which highlights the concerns many have that Embraer is selling off the only profitable segment of the business.
Though the sale to Boeing is still awaiting regulatory approval, current problems with its 737 MAX program are not expected to delay the acquisition of a stake in Embraer. Embraer’s Chief Financial Officer Nelson Salgado also confirmed that Boeing’s problems would “absolutely not” boost demand for Embraer’s planes.Email Post to a Friend