Cancellations in the business aviation segment and reduced margin because of learning curve in building Phenom 100 very light jets contributed to Embraer suffering a $23.4 million net loss for the first quarter, the Brazilian manufacturer reports today.
Aircraft deliveries were down 11.1% compared to last year’s first quarter, with 40 airliners and executives jets being handed to customers – it was 45 in the first quarter of 2008. Net sales for the first quarter stood at $1.15 billion, that’s down 13.6% from the prior year.
The 40 aircraft deliveries are broken down as two Legacy 600s and six Phenom 100s, with 32 regional jets going to customers – one ERJ145, 5 E170s, 3 E175s, 17 E190s, 6 E195s.
There were five fewer Legacy 600 deliveries in this year’s first quarter than last, which the six Phenom 100 deliveries could hardly offset, leading to revenue in that segment to come down 59.6% to $70.2 million.
Overall, the company says cancellations in the business aviation segment, coupled with deferrals in its regional airliner activities, led to a 5.7% drop in firm order backlog, which now stands at $19.7 billion.
Margins were also affected, both by layoffs announced in February and Phenom 100 production. Embraer is still working on some kinks on the Phenom 100 very light jet, and that contributed to gross margins coming down from 20.4% in the first quarter last year to 18.2% this past quarter.
It’s not much of a silver lining, but Embraer did book some revenue from cancellation fees.[Photo: Embraer]