Embraer announces Q1 2020 results, exploring options for collaboration on joint venture

Photo by Karam Sodhi | AeroNewsX

Brazil-based aircraft manufacturer, Embraer SA, released its financial results for the first quarter of 2020 (ending March 31st, 2020) on Monday, June 1st, 2020. The manufacturer’s revenue for the quarter stood at US$633.8 million after having delivered 14 jets, three more than the previous year. Embraer delivered five commercial and nine executive jets, which left it with a firm order backlog of US$15.9 billion at the end of Q1 2020.

However, the company reported a net loss of US$292 million, which is an EBIT (Earnings Before Interest and Tax) of US$(46.9) million and an EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) of US$9.3 million. This yields an EBIT margin of -7.4% and an EBITDA margin of 1.5%. These figures compare to an EBIT of US$(15.2) million and EBITDA of US$30.9 million for Q1 2019. Deliveries have been negatively affected due to the COVID-19 pandemic and the collapse of the Master Transaction Agreement between the firm and American aircraft manufacturer Boeing Company. To deal with the negative effects of the global health crisis on its business, Embraer has placed most of its Brazil-based employees on paid leave, which has in part led to an almost 10% increase in consolidated gross margins over the similar period last year.

In April, Boeing abruptly ended its deal with Embraer as it claimed that Embraer failed to satisfy the terms of the venture. The Brazilian manufacturer has, however, refuted these claims and rejected them as grounds for cancellation. This left Embraer without a partner for its commercial jets division as well as the KC-390 Military Transporter.

According to a Reuters report on June 1st, 2020, Embraer is again looking for partners for the collapsed Boeing deal. CEO, Francisco Gomes Neto, has named India, China, and a few other countries as possible partners for the commercial jet venture, though no possible collaborations for the KC-390 deal have yet been mentioned. Neto, however, stated that Embraer is not in talks with anyone at the moment to be a possible partner, but is continuously evaluating possibilities. Embraer’s growth has been declining at a rate of approximately 23%, which explains the need for partners to keep the business afloat.