Embraer's Profit Stronger Despite Republic Impact

Embraer booked a 22 percent rise in fourth-quarter net income, boosted by a more profitable sales mix and currency effects.

Profit rose from a year earlier to USD$111.2 million, as the company set aside money to cover potential losses from the Chapter 11 filing of major client Republic Airways.

Double-digit inflation in Brazil has driven up staff costs and the fourth-quarter earnings showed Embraer has been forced to offer bigger discounts on executive jets as it tries to grow in a sluggish and highly competitive market.

Embraer still forecast gradual sales growth this year due to solid demand for its regional jets and new executive aircraft.

Net revenue should rise to between USD$6 billion and USD$6.4 billion from USD$5.9 billion last year despite weaker sales from its military division, Embraer said.

The outlook reflects Embraer's confidence in a solid order backlog for the current generation of its regional E-Jets before their re-engined replacements start entering service in 2018.

The company also said it expected its new mid-size Legacy 450/500 jets to boost the executive aviation division's sales despite a weak recovery in the global market for private jets.