Embraer Confident On Delivery Goal; Eyes Turboprop Engine Decision

Embraer Turboprop
Credit: Embraer

Embraer expects to choose an engine supplier for its proposed new turboprop by year-end and is exploring “alternatives” for funding the project, CEO Francisco Gomes Neto said. 

“We are progressing well on tests, wind tests and other engineering activities,” Gomes Neto told analysts on an Aug. 4 earnings call. “We expect to decide about the engine selection in the second half of the year, and we expect to approve the business case beginning of next year.” The company announced at the recent Farnborough Airshow that the project has letters of intent (LOIs) for 250 aircraft, “even not having the business case approved,” Gomes Neto said. The company plans to launch 70- and 90-seat versions but has not decided which would come first. The engine competition is between Rolls-Royce and Pratt & Whitney. 

Meanwhile, supply chain related headwinds that have held up some deliveries will not keep the company from reaching its full-year delivery target of 100-110 aircraft, executives said. As of June 30, the company had delivered 46 aircraft—17 regional jets and 29 executive jets. 

Delays have led to at least four commercial aircraft missing expected delivery windows, but the company expects to be caught up by the end of August. 

“Despite the very challenging supply scenario, our [full year] plans have not changed, and we remain confident in the delivery of the aircraft,” CFO Antonio Garcia said. 

“This is a major short-term issue for the whole industry globally,” Gomes Neto said. “To minimize the impact, we are working very close to our supply chain, having people on site [at] the main suppliers, developing other logistical groups, and working on improvements in internal processes and cycles to absorb part of the challenges.” 

On the defense side, Embraer has seven C-390s in various states of assembly. They include four aircraft for the Brazilian Air Force, two for the Portuguese Air Force and one headed to the Hungarian Defense Forces. 

Embraer posted net income of $39.4 million in the second quarter (Q2), down 10% year-over-year (YOY). Top-line revenue totaled $1.02 billion, down 10%. 

Commercial Aviation revenue fell 23% YOY to $299.9 million due to lower aircraft deliveries in the quarter.  

Higher unit prices and one additional delivery compared to Q2 2021 helped Executive Aviation edge up 0.2% to $266.7 million, the company said. 

Defense & Security saw revenue fall 28%, primarily due to fewer Super Tucano deliveries, the company said. 

Services & Support saw revenue jump 7.4% to $320.1 million thanks to steady recovery in both the commercial and business jet fleets. Gains in pool programs and components helped drive aftermarket growth. 

Sean Broderick

Senior Air Transport & Safety Editor Sean Broderick covers aviation safety, MRO, and the airline business from Aviation Week Network's Washington, D.C. office.