The Economy

Embraer Jet Deliveries Up From First Quarter

July 18, 2011

'Order flow was again the bright spot,' Morgan Stanley Research concludes.

Embraer reported that it delivered 25 commercial jets and 23 executive jets in second-quarter 2011.

Deliveries rose from 20 commercial jets and eight executive jets in the first quarter.

As of June 30, the Brazil-based jet manufacturer had a firm-order backlog of $15.8 billion.

Embraer's commercial-jet deliveries were in line with Morgan Stanley Research's expectations, while the company's executive-jet deliveries fell short of Morgan Stanley's estimate of 29.

Still, the research firm said the soft delivery numbers are offset by some momentum in Embraer's orders.

Of the 25 commercial jets that Embraer delivered in the second quarter, 17 were Embraer 190s.
"Though the official backlog slipped to $15.8 billion (from $16 billion last quarter), it does not yet include the sale of an additional 42 E190s pending final documentation," Morgan Stanley Research said in an analysis of Embraer's Q2 results. "This should bring total orders to 104, above Embraer's guided commercial deliveries of 100."

Other positives include new defense contracts, such as the Super Tucano orders from Indonesia and additional fighter renewals for the Brazilian Air Force, Morgan Stanley said in the analysis.

Embraer said it gained three new E-jets customers in the quarter: People's Viennaline, of Austria; Air Astana, of Kazakhstan; and Bulgaria Air.

From an investment perspective, Morgan Stanley Research is sticking to its prior forecast for Embraer. The research firm expects a "gradual upswing" in Embraer's orders, "some of the best products within its niches" and "a valuation near the long-term average despite near-trough earnings."

"The primary risks center on extended global macro volatility and jet fuel prices, in our view," the research firm said.

Josh Cable | Former Senior Editor

Former Senior Editor Josh Cable covered innovation issues -- including trends and best practices in R&D, process improvement and product development. He also reported on the best practices of the most successful companies and executives in the world of transportation manufacturing, which encompasses the aerospace, automotive, rail and shipbuilding sectors.

Josh also led the IndustryWeek Manufacturing Hall of Fame, IW’s annual tribute to the most influential executives and thought leaders in U.S. manufacturing history.

Before joining IndustryWeek, Josh was the editor-in-chief of Penton Media’s Government Product News and Government Procurement. He also was an award-winning beat reporter for several small newspapers in Northeast Ohio.

Josh received his BFA in creative writing from Bowling Green University, and continued his professional development through course-work at Ohio University and Cuyahoga Community College.

A lifelong resident of the Buckeye State, Josh currently lives in the Tremont neighborhood of Cleveland. When the weather cooperates, you’ll find him riding his bike to work, exercising his green thumb in the backyard or playing ultimate Frisbee.