Embraer 2011 Deliveries At Three Year Low

January 11, 2012

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Brazil's Embraer, the world's third-largest commercial plane maker, said 2011 deliveries fell to a three-year low, missing initial estimates after the global downturn had led to a string of cancelled executive jet orders.

Still, the company replaced deliveries of regional E-Jets last year with new firm orders, keeping its commercial aviation backlog steady for the first time since 2008 in a sign of resilience despite a global slowdown in civil aviation.

Embraer delivered 32 commercial planes and 50 executive jets in the fourth quarter, bringing total deliveries for 2011 to 204, short of the 220 target set out early in the year. Embraer reported 246 deliveries in 2010.

The shortfall in deliveries last year came from cancelled orders for less costly private jets, which Embraer had warned would hit total deliveries. Chief executive Frederico Curado said in November he saw a cycle of executive jet cancellations coming to an end this year.

Curado said last month Embraer would meet 2011 revenue estimates of between USD$5.6 billion and USD$5.7 billion, signalling more revenue may come from the company's defence unit, which has taken on greater relevance as civil aviation slows globally.

Embraer did not report defence aircraft in its delivery totals.


In the larger commercial aviation segment, a fourth-quarter surge of 45 new orders for the company's regional E-Jets lifted the backlog of firm orders to 249 planes -- nearly even with 250 planes a year earlier.

Differences in the size of planes also reduced the value of the company's backlog -- a gauge of demand and future revenue -- to USD$15.4 billion at the end of last year, down USD$1.2 billion from 2010, to its weakest year-end level in five years.

A senior executive said last month that Embraer could face a challenge selling the current generation of E-Jets now that it has plans for a new engine in the lineup, which may not be available for firm orders until 2013.

The new engine for the E-Jets reflects Embraer's decision to invest in the regional commercial aviation market that it has long dominated, even as chief rival Bombardier cuts back production in the segment.

Embraer's slipping deliveries came in a year when an earthquake in Japan interrupted General Electric's production of aircraft engines with Japanese parts, pushing back the delivery of some jets.

To meet its full-year target, Embraer needed to deliver nearly 100 planes last quarter, after booking 122 deliveries in the first nine months of the year.

Embraer reports full-year financial results on March 20.