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Embraer stays confident on executive jets performance

Embraer has played down a fall in nine-month revenues at its executive jets division, claiming that it has sacrificed "volumes and market share" to focus on "price and profitability".

Revenues fell by 22% – to $647 million – in the period ended 30 September, down from $847 million a year earlier. Output fell slightly to 55 aircraft, from 59 in the first three quarters of 2017, and while shipments of 40 Phenom 100/300 light jets held steady at 40 units, combined deliveries of the large-category Legacy 450/500/650, plus the Lineage 1000E, dropped from 19 to 15 aircraft.

But speaking on a 30 October earnings call, Embraer’s executive vice-president, finance and investor relations Nelson Salgado dismissed the significance of the decline.

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Embraer

“It's important to mention that we have been focused on price and profitability recovery rather than volumes and market share,” he says.

Embraer’s decision in 2016 to introduce a series of enhancements across its Phenom and Legacy families to boost its orderbook, has also begun to pay off, he says.

“We implemented a programme to turn around the business, with a big focus on customer value,” Salgado says. “We are now seeing the result of that effort."

This strategy contributed to a 43% year-on-year increase in revenues in the third quarter, to $312 million. Output rose by four units over the same period in 2017 to 24 aircraft. However, Embraer does not provide profit figures at divisional level.

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Embraer

The airframer remains confident that it will hit its revenue and delivery guidance for the year, as shipments continue their upward trend in the final quarter and prices firm up.

The company surprised the market in October by unveiling two new models – the Praetor 500 and 600 – which Salgado calls “the most disruptive and technologically advanced jets in the midsize and super-midsize segments”.

Embraer chief executive Paulo Cesar de Souza e Silva says the airframer has "bullish" expectations for the Praetors, with strong demand for the pair helping to grow its orderbook in the third and fourth quarters and onwards into 2019, when the aircraft are scheduled to enter service.

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