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Embraer posts 2018 loss amid declining deliveries

Embraer swung to a $171 million net loss in 2018 amid slumping revenue driven by fewer commercial and business aircraft deliveries.

The loss compares to the Brazilian company's net profit in 2017 of $280 million.

"These results are not that troublesome because they are related to the revenue volume," Embraer chief financial officer Nelson Salgado tells reporters on 14 March. "Results will get back on track, especially because of E2 deliveries and KC-390 deliveries, and executive aviation."

"We are getting through… a very strong development phase," Salgado adds, citing development of the E-Jet E2, the KC-390 military aircraft and the Praetor line of business jets.

The company's 2018 revenue declined 13% in one year to $5.1 billion.

Embraer earned an operating profit of $35.3 million in 2018, down from $342 million one year earlier. The results also account for additional expenses stemming from a KC-390 accident last year.

Embraer's commercial aviation unit's 2018 revenue slipped 15% in one year to $2.4 billion, with deliveries of 90 commercial aircraft during 2018, down from 101 deliveries in 2017, it says.

The 2018 deliveries, which were within the company's guidance, included one E170, 67 E175s, 13 E190s, five E195s and four E190-E2s.

Embraer expects to receive E195-E2 certification in the first half of this year followed by the first delivery in the third quarter, and it continues progressing with E175-E2 development, the company says.

Embraer's executive jet unit earned revenue of $1.1 billion in 2018, down 14% from 2017. During 2018, Embraer delivered 91 executive aircraft, including 64 light jets and 27 large business jets.

Executive jet deliveries were down from 109 aircraft in 2017 and less than the company's previous expectation that it would deliver 105 to 125 business jets in 2018.

"Global market conditions for executive jets, although gradually improving, continued to recover more slowly than expected," the company says.

Embraer continues progressing with development of its new Praetor line of midsize business jets, having already concluded flight tests for the Praetor 600, putting the company on track for first delivery of that variant in second half of the year, says Salgado.

Certification and deliveries of the Praetor 500 will follow, Embraer says.

"The programme is moving along according to budget," says Salgado.

Embraer's defence and security business generated $612 million in revenue, down 28% from 2017, while its services and support unit earned $981 million last year, up 6.4% year-on-year.

The company expects better results this year, predicting it will generate $5.3 to $5.7 billion in 2019 revenue with deliveries of 85-95 E-Jets, 90-110 business jets, two KC-390s and 10 Super Tucano light attack aircraft.

Embraer also expects regulatory approval this year of a proposal to sell a majority of its commercial aircraft division to Boeing, and for a joint venture with Boeing to promote and develop the KC-390.

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