Embraer posts Q1 loss, says business jets recovering

Cancelled Boeing deal cost Brazilian plane maker US$22 million as commercial aircraft revenue falls

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Brazilian plane maker Embraer on Monday (1 June) report a net loss of US$292 million for the first quarter of 2020 compared to a net loss of US$43 million in the same quarter a year ago. The company said revenues totalled US$634 million compared to US$823 million in the same quarter in 2019. The company said the global COVID-19 pandemic halted commercial jet production during January and was also halted to ready the company for its planned joint venture with Boeing, that was to have taken control of the commercial jet programme. Boeing cancelled the US$4 billion deal and both sides blame each other for its failure.

A screenshot of the Johns Hopkins University COVID-19 tracking site. To access the live site, click on the image. (PHOTO: Matt Driskill)

Embraer said its commercial aircraft revenues fell 50 percent to US$141m versus US$281 million last year. It added that its business jet segment is recovering somewhat, with first-quarter revenue this year up 11 percent to US$130 million compared to US$117 million in the first quarter of 2019, saying “high-end deliveries are now strong after several years of a slump”.

Separation costs for the cancelled Boeing joint venture during the first quarter was US$22 million, while the company also said the first quarter results included costs of US$55 million in “special items due to the impacts of COVID-19”. Embraer lowered the fair value of its stake in Republic Airways and made bad debt provisions for weak airliner customers of US$33 million.

Boeing and Embraer said they would continue to work together on the C-390 military cargo plane. (PHOTO: Embraer)

Arbitration proceedings with Boeing have started for the cancelled commercial airplanes joint venture agreement and the KC-390 contribution agreement. Embraer said in the quarterly presentation call it would be open to new cooperation agreements but had nothing new to tell on the subject.

The company said it delivered five commercial jets and nine executive jets (five light/four large) in the first quarter and Embraer’s firm-order backlog at the end of the quarter was US$15.9 billion.


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Asian Aviation
Matthew Driskill is the Editor of Asian Aviation and is based in Cambodia. He has been an Asia-based journalist and content producer since 1990 for outlets including Reuters and the International Herald Tribune/New York Times and is a former president of the Foreign Correspondents Club of Hong Kong. He frequently appears on international broadcast outlets like CNN, Al Jazeera and the BBC and has taught journalism at Hong Kong University and the American University of Paris. Driskill has received awards from the Associated Press for Investigative Reporting and Business Writing and in 1989 was named the John J. McCloy Fellow by the Graduate School of Journalism at Columbia University in New York where he earned his Master's Degree.

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