Embraer Sees Slow Market Recovery, But On Target For 2012
By Kerry Lynch email@example.com
Source: AWIN First
The prolonged downturn, meanwhile, has continued to erode the Embraer backlog, which once approached nearly $21 billion, to $12.9 billion by the end of the second quarter. Increased deliveries of E-Jets as well as lost commercial and business jet orders contributed to that decline, which spurred at least two analysts – JP Morgan and Cowen – in recent weeks to downgrade the Brazilian manufacturer from “overweight” to “neutral” ratings.
On the business jet side, Edwards noted that the Executive Jets group encountered a few multi-order cancellations this year. But the discussions of those cancellations actually began in 2011 and were not finalized until this year, he says. “We’re happy that is behind us,” Edwards adds. Beyond those multi-order cancellations, he says cancellations overall continue to slow and are not at the pace of the past couple of years.
Despite the cancellations, Embraer still expects to meet its target of delivering 75-85 Phenoms and 15-20 of its larger cabin aircraft in 2012, Edwards says. The company had delivered 29 Phenoms and four Legacy/Lineages through the end of the second quarter, but has been ramping up for the year-end push, when many customers ask to take delivery.
Edwards says the company has been pleased by the increasing interest in both the Legacy 650, as well as the Lineage. The Phenom 300 at the same time has maintained a healthy backlog thanks to orders from fractional providers including both NetJets and Flight Options. But Phenom 100 sales remain a struggle.
Even with the recent fluctuations, Embraer has remained on its business plan set out in 2005 – when the Executive Jets division was formally established – to become a major player in the industry by 2015. The company now has an offering in nearly every niche – except the ultra-long-range category filled by upper-end Gulfstreams and Bombardier Global aircraft. “I think we’ve achieved our objective,” he says.
As for the ultra-long range, Edwards acknowledges the company sees that “gap” in its product line, but says it does not currently have plans to target that market.