BREAKING: Embraer to cut 20% of workforce, joins Airbus in scaling back production

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Embraer announced today (PDF) that it plans significant cuts in aircraft production and its workforce as a result of the “unprecedented crisis affecting the global economy.”

The reduction in personnel represents approximately 20 percent of its 21,362 employees and is concentrated in the production and administrative areas, including the elimination of one layer in the management structure. The significant majority of the engineering workforce will be kept engaged in programs for development of new products and technologies, which will be kept unchanged.
 
In light of this new scenario, Embraer has revised its revenue guidance for 2009 to US$ 5.5 billion, corresponding to 242 commercial and executive aircraft deliveries. As a result of this reduction in revenues, the Company has also revised its investment guidance to US$ 350 million for the year.

Embraer initially expected to deliver 270 business and commercial aircraft in 2009, a cut of 10%. The Brazilian manufacturer did not specify if the cuts would impact the business or commercial side of the business. Though, if competitors Bombardier, Cessna and Hawker Beechcraft are a guide, then the production cuts could predominantly impact business aircraft production.

Earlier today, Airbus also announced a production cut for its A320 Family aircraft from 36 to 34 /month, while holding A330/A340 production at 8.5/month. The delivery forecast of 21 A380s in 2009 was still in effect, though overall production would be “similar” to 2008′s 483 aircraft delivered. The European airframer did not specify any reduction in workforce, but warned that further cuts may be possible.

One Response to BREAKING: Embraer to cut 20% of workforce, joins Airbus in scaling back production

  1. Marcelo W Lopes February 20, 2009 at 7:03 am #

    Hey Jon,
    Sometimes we talk in private, but this comment is worthy, espcially for your kind of readers.
    The problem with Embraer is not exclusively the industry, it’s Brazilian Government.
    Recently David Neeleman opened an airline in Brazil called “Azul Linhas Aéreas”, using only Embraer jets.
    I read the other day (trustworthy source) that the politics are preventing Azul of operating to and from Rio de Janeiro Santos Dumont Airport and “Azul has already asked for the right in court”.
    Link here (portuguese, for those who speak/read).

    Anyway, the problem, really, is that the current cartel that dominates the sky in Brazil (TAM and GOL), together with the fare price control BY THE very government and public administration of airports (Infraero) are mining growth capabilities of the market. I’m no expert in politics, but I do work in Transport Engineering, so something has to be said.

    Infraero is fully controlled by the Government AND, what’s worse, positions are occupied in a politics base. Influence counts more than technical knowledge.

    Let’s when this changes, IF it changes.