EMBRAER boosted by wealthy customers seeking jets to avoid coronavirus

RIO DE JANEIRO, BRAZIL – Wealthier customers flying more in corporate jets to avert the risk of contracting coronavirus on commercial aircraft are driving EMBRAER‘s (EMBR3) growth.

Despite last year’s collapse of the air travel industry during the pandemic, the manufacturer has seen improved demand for its small and medium-sized aircraft, said EMBRAER’s CEO Francisco Gomes Neto.

New order deliveries jumped 57% in the first quarter from a year ago to 22 jets, 13 of which were executive aircraft. “We are in the right market with the right products,” Gomes Neto said in a video interview.

Investors have rewarded the company with the improved outlook, prompting shares to accumulate a 74% hike this year, one of the best performances of the Ibovespa index, which is virtually at the same level as the beginning of 2021. The surge comes after EMBRAER suffered a 55% drop last year, one of the worst in the index.

The commercial aviation industry is suffering as countries struggle with Covid-19 waves marked by new quarantines. Still, amid uncertainty, EMBRAER sees the progress of the vaccination campaign as key to securing new orders, starting in the second half of the year. Gomes Neto says that the company has no plans to buy vaccines for its employees and that it intends to follow the federal government’s vaccination schedule.

The manufacturer’s outlook improved further this month when it received an order for 30 E195-E2 aircraft from an undisclosed customer, suggesting that demand for its commercial aircraft is growing. This could help EMBRAER’s continued recovery after reducing its adjusted net loss in the first quarter to US$96 million, compared to US$104 million a year ago.

“EMBRAER has the potential for a good post-pandemic profit recovery, provided it keeps production discipline and costs under control,” Bloomberg Intelligence analyst George Ferguson wrote in a note. “Regional jets could lead to a pickup in aviation.”

Partnerships

Gomes Neto said the company is making progress on different partnership fronts as part of EMBRAER’s strategic plan to open new markets for its E2 medium-range business jets and C-390 Millennium military transport aircraft, as well as financing the next-generation turboprop line.

The CEO also says he may release information within 4 to 6 weeks on the deal that includes the 30-jet order announced by the manufacturer.

EMBRAER is focusing on restoring its cash position and reducing debt while continuing to invest. “By 2023, EMBRAER will be larger than it was before the pandemic in terms of revenue and profitability,” he said.

Source: Moneytimes