Embraer Releases First Quarter 2008 Results in US GAAP

SAO JOSE DOS CAMPOS, Brazil, May 6 /PRNewswire-FirstCall/ -- Embraer (BOVESPA: EMBR3; NYSE: ERJ), the world's leading manufacturer of commercial jets with up to 120 seats, recorded first quarter 2008 (1Q08) net sales of US$1,335.9 million and net income of US$85.0 million, equivalent to diluted earnings per ADS of US$ 0.4633.

Embraer added new customers to its firm order backlog in the first quarter of 2008 such as Air Moldova, Jetscape and the new Brazilian airline founded by David Neeleman, Azul Linhas Aereas Brasileiras S.A. Also during 1Q08, traditional customers, such as Finnair and Lot Polish, have announced new firm orders for the E-Jets, and Embraer also disclosed the names of Petroecuador and Universal Airlines, whose firm orders were already included in the Company's backlog as of December 31, 2007 as "undisclosed". Furthermore, during 1Q08, Regional, Virgin Blue, Egypt Air and M1 Travel confirmed options for the E-Jets.

Embraer's firm order backlog on March 31, 2008, increased 8.0% over the previous quarter reaching a record high of US$20.3 billion, highlighting sales to the Executive Aviation market and the favorable performance of the EMBRAER 170/190 family. The backlog accumulated a total of 835 firm orders and 840 options.

In 1Q08, Embraer delivered 45 jets for Commercial and Executive Aviation segments. Embraer reaffirms its delivery forecast for 2008 of between 195 and 200 aircraft, for the Commercial Aviation, Executive Aviation and Defense and Government segments, and 10 to 15 Phenom 100 jets. The certification process for the Phenom 100 is on schedule and the Company expects to conclude it in the second half of 2008, as planned.

Net revenues for 1Q08 totaled US$1,335.9 million, a 60.6% increase over the US$831.8 million in net revenues of the first quarter of 2007 (1Q07), basically due to the increase of deliveries and the product mix delivered.

The gross margin for 1Q08 totaled 20.4%, representing a decrease from the 22.5% gross margin for 1Q07, mainly due to the impact of the 17.6% decrease in the exchange rate (R$/US$) on the 15% portion of our cost denominated in reais and the yearly contractual adjustment in suppliers costs. The decrease in the gross margin from 22.6% in the 4Q07 to 20.4% in the 1Q08, is also due to annual contractual adjustment to suppliers costs and the product mix delivered.

Income from operations reached US$48.7 million in 1Q08, a 214.2% increase over the US$15.5 million recorded for the same period last year. The increase is due to the higher gross profit in the quarter. The operating margin was 3.6% in 1Q08, representing an increase compared to the 1.9% operating margin for 1Q07, resulted from a more favorable dilution of the fixed costs. Despite the Commercial and Administrative expenses reduction from 4Q07 to 1Q08, the income from operations was reduced due to lower deliveries and consequently reduced gross profit.

The increased operating results led to growth in net income, which totaled US$85.0 million in 1Q08, compared to US$26.2 million in 1Q07. The net margin increased to 6.4% in 1Q08, compared to 3.1% in 1Q07.

For the year ended December 31, 2007, the Company maintained its high level of liquidity, and its cash position at the end of 1Q08 was US$649.9 million.

FIRST QUARTER 2008 in perspective

EMBRAER SELLS ERJ 145 JET TO PETROECUADOR

Embraer entered into an agreement with Petroecuador, Empresa Estatal Petroleos del Ecuador, to sell one ERJ 145 jet. The contract also includes a logistical package for supplying replacement parts, technical support and crew training.

LOT POLISH AIRLINES TO ADD 12 MORE EMBRAER 175 JETS

Embraer entered into an agreement with LOT Polish Airlines for the sale of additional 12 EMBRAER 175 (E175) jets, plus two options and ten purchase rights.

UNIVERSAL AIRLINES BUYS SIX EMBRAER 195 JETS

Embraer entered into an agreement with JJH Capital, part of the group who also controls Air Europa and Globalia, for the sale of six EMBRAER 195 jets, plus purchase rights for another six aircraft.

EMBRAER 190 AIRCRAFT IS CHOSEN BY AIR MOLDOVA

Embraer entered into an agreement with the Moldovan flag carrier Air Moldova for the sale of one EMBRAER 190 jet. The contract includes purchase rights for another aircraft of the same model.

EMBRAER CONFIRMS TWO E-JETS OPTIONS FOR REGIONAL

Embraer and Regional, a wholly-owned subsidiary of Air France, entered into a contract for the sale of two additional E-Jets, being one EMBRAER 170 and one EMBRAER 190, confirming options originally taken in August 2007.

EMBRAER CONFIRMS SIX EMBRAER 170 JETS FOR EGYPTAIR HOLDING

Embraer received confirmation from EgyptAir Holding Company for six additional EMBRAER 170 aircraft. Deliveries are schedule to begin in 2009. The original contract, related to six firm orders and six options (now confirmed), was announced in September 2006.

EMBRAER RECEIVES NEW E-JETS ORDER FROM VIRGIN BLUE

Embraer and Australia's Virgin Blue Airlines Pty Ltd. have entered into a contract to exercise four purchase rights for EMBRAER 190 jets and to convert another three into options for the same model.

EMBRAER AND JETSCAPE SIGN FOR TEN EMBRAER 190 JETS

Embraer and the U.S. aircraft leasing company Jetscape, Inc., based in Fort Lauderdale, Fla., signed an agreement for the acquisition of ten EMBRAER 190 jets, with options for an additional ten aircraft and another ten purchase rights for the same model.

FINNAIR PURCHASES THREE MORE EMBRAER 190 JETS

Embraer entered into an agreement Finnair for the sale of three more EMBRAER 190 aircraft.

EMBRAER CONFIRMS THREE E-JETS OPTIONS FOR M1 TRAVEL LTD.

Embraer and Lebanese M1 Travel Ltd. confirmed options on three EMBRAER 190 jets.

EMBRAER SIGNS NEW BRAZILIAN AIRLINE TO US$ 1.4 BILLION CONTRACT

Embraer entered into a contract with Azul Linhas Aereas Brasileiras, the newest Brazilian airline commanded by businessman David Neeleman, for the sale of 36 EMBRAER 195 jets. The agreement also includes options for another 20 aircraft and purchase rights for 20 more.

EMBRAER CONCLUDED THE PURCHASE OF 2.3% OF ITS COMMON SHARES

On March 31, 2008, Embraer concluded the purchase of 16,800,000 common shares, or 4,200,000 ADRs, representing 2.3% of its capital, at the average price of R$ 19.06 per share. The share buy-back was approved by Embraer's Board of Directors in December 2007 and represented a total disbursement of R$320.2 million.