Embraer reported its firm order backlog for the Commercial Aviation, Executive Aviation, and Defense and Government segments increased by $1.6 billion during the third quarter of 2007 (3Q07), totaling a record $17.2 billion. In its original announcement, the company inadvertently included sales to Air Europa which would have brought the backlog to $17.4 billion. However, it has yet to sign a sales contract with the airline.
Embraer achieved its expected aircraft production for the third quarter by delivering 38 jets to the Commercial Aviation segment, nine Legacy 600 aircraft to the Executive Aviation segment and one EMB 120 Brasilia to the Defense and Government segment for the government of Angola. In order to spool up its production, it added a third shift which is nearly complete affording the delivery of between 165 and 170 jets in 2007.
During the third quarter of 2007, Embraer signed a contract for the sale of 20 E-Jets to the Air France/KLM group in Europe. The sales team also recorded another achievement with the conclusion of the sale of 20 ERJ 195 aircraft to BRA Transportes Aereos, the first Brazilian airline to order ERJ 170/190 family jets. The Phenom family continues to record solid results with more than 500 firm contracts signed, and reached an important milestone in the development of the Phenom 100 program, with the first flight of the prototype aircraft on July 26. In the 3Q07, Embraer also recorded the delivery of the 1,000th aircraft of the ERJ 145 family aircraft through its joint venture in China to Grand China Express, an airline of the HNA Group that ordered 50 aircraft of this model. Related Story
“Importantly, Embraer delivered 36 E-Jets during the quarter, exceeding our E-Jet delivery estimate by four aircraft, as the actions taken by the company to address the E-Jet production difficulties are showing the desired results,” said Calyon Securities Analyst Ray Niedl. “Demand for Embraer's products remains strong, and the company's firm order backlog increased by about three year's worth of revenue. [Owing] to our increased confidence in Embraer's ability to execute and, given rising valuations in the aerospace universe, we are increasing our price target to $53. We calculate that for 3Q, Embraer had an average production rate of about 12 E-Jets per month, up from about nine E-Jets per month in 2Q. The company's goal is to reach 14 E-Jets per month by the end of the year.”