$23 Million Loss On $1,154 Million In Income, Down 13.6% Over 2008

The business and commercial aviation industries continue to show weakness as more 1Q/09 details are revealed. Embraer reports 1Q/09 net sales of $1,154.1 million (US) and a net loss of 23.4 million. Embraer prefaces their report with the note that 'due to the severe worldwide economic downturn since September 2008, Embraer recorded cancellations of some of the firm orders of its executive aviation backlog as well as deferrals of deliveries scheduled for the commercial aviation segment.'

As a result, the Company’s firm order backlog on March 31, 2009, decreased by 5.7% compared to the previous quarter, totaling $19.7 billion. The backlog of the Embraer 170/190 family accumulated a total of 875 firm orders and 792 options, with 354 aircraft to be delivered. In 1Q/09, Embraer delivered 40 jets to the commercial and executive aviation segments, or a reduction of 11.1% when compared to 45 jet deliveries in the first quarter of 2008.

As a result, Embraer revised its revenue guidance for 2009 to $5.5 billion, broken down as $3.3 billion in revenues for the commercial aviation segment, $0.8 billion for the executive aviation segment, $0.6 billion to the defense and government segment and $0.8 billion for services and other revenues. The Company has also reduced its delivery guidance for 2009 down from 270 to 242 commercial and executive aircraft deliveries, with 115 deliveries to the commercial aviation segment, 17 Legacy 600 and Lineage 1000 jets to the executive aviation segment plus 110 Phenom jets to the same segment. Embraer’s total investment guidance for 2009 was also revised to $350 million.

Embraer has not been immune to the need for workforce reduction, as well, calling their layoffs, "inevitable to implement a revision the Company’s cost structure and workforce, adjusting it to the new reality of demand for commercial and executive aircraft. A reduction in personnel (layoffs) carried out in February, 2009 involved approximately 20% of the Company’s workforce and was concentrated in the production and administrative areas, including the elimination of one layer in the management structure."

Net revenues for 1Q/09 totaled $1,154.1 million, or a 13.6% decrease from the $1,335.9 million in net revenues of 1Q/08, basically due to fewer deliveries in 1Q/09.

FMI: www.embraer.com