Embraer Swings To Q2 Loss, Cuts Outlook

Embraer cut its outlook for executive jet sales this year and set aside USD$200 million to settle a US graft probe, triggering a quarterly loss.

Embraer said in a securities filing it was nearing a settlement to defer prosecution under the US Foreign Corrupt Practices Act (FCPA) for allegedly bribing officials in the Dominican Republic to secure a deal for military aircraft.

The provision for that possible deal contributed to a net loss of USD$99 million in the second quarter, down from a USD$129 million profit a year earlier.

Embraer cut its outlook for executive jet sales this year by 10 aircraft, which lowered estimates for revenue, operating profit and cash flow.

Chief Financial Officer Jose Antonio Filippo told reporters that Embraer was determined to defend pricing on its executive jets in a weak market, which led the company to cut back its deliveries this year.

Weak global growth and a glut of used jets has weighed on demand for new executive aircraft, leading Dassault Aviation to cut its delivery forecast for Falcon business jets this month.