Support Services Become Embraer’s Biggest Earner
The aftermarket has become Embraer’s biggest and most profitable revenue stream following a quarter in which the Brazilian manufacturer benefited from recovering flight activity and associated maintenance demand.
Out of group-wide sales of $600 million for the first three months of 2022, Embraer Services & Support reported revenue of $271 million – well ahead of its next largest segment, Embraer Commercial, which posted revenue of $169 million.
Furthermore, Services & Support’s gross margin of 26.5% made it the OEM’s most profitable segment, ahead of Executive Aviation’s 18.7% in second place.
During the first quarter Embraer signed a long-term contract extension for its pool program with German Airways, and a pool program covering the Embraer 190 with Aerolineas Argentinas. Embraer's pool program now supports more than 50 airlines worldwide.
Altogether, Embraer’s aftermarket sales climbed 8% from the prior-year quarter, although Services & Support may not remain the leading segment for long.
This is because the reintegration of Embraer Commercial into the wider group meant a shutdown of Embraer’s production line for most of January, which inhibited commercial aircraft sales and revenues.
The OEM delivered six aircraft in the quarter, versus nine the year before and 16 in the final quarter of 2021.
Deliveries in the recent quarter comprised four Embraer 175s for Skywest and two E195-E2s to lessor Aircastle.
At 31 March 2022, Embraer’s commercial backlog number 315 aircraft, including 166 E195-E2s and 143 E175s.
In a bid to drive more sales of the newer E2 variant, during the first quarter Embraer launched E190 and E195 full-freighter conversions, with entry into service expected in early 2024.
The OEM said that these conversions would “facilitate the replacement of the older passenger aircraft by new generation E2s”.