Brazilian aircraft manufacturer Embraer on July 31, 2018, released its second-quarter 2018 financial results, posting a net loss of $127 million. The loss is attributed to fewer commercial and executive jet deliveries and a steep drop in revenue at Embraer’s defense aircraft division. Neither the E2 Family jets nor the multi-mission KC-390 military aircraft program have been doing well as results indicate.

According to Embraer’s earnings release, the company sustained a net loss attributable to shareholders of $127 million in the second quarter of 2018. The $126.5 million is a one-time special charge for changes in the flight-test campaign of the KC-390 military transporter, following a May 2018 landing accident involving the aircraft, that led to a $17.7 million operating loss in the second quarter.

Excluding the special charge, Embraer would have reported an adjusted operating profit of $110 million and an adjusted net profit of $6.1 million, the financial report states. For comparison, the plane makers had reported an operating profit of $178 million and a net profit of $62 million in the second quarter of 2017.

Embraer’ reports its consolidated revenue was down by 29% at $1.26 billion due to lower deliveries of both commercial and executive jets, as well as cost base revisions related to the KC-390 development contract.

According to Reuters, the plane maker reported this month a 20% drop in jet deliveries to airlines, weighing on revenue in its commercial aviation operations. Its earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 83% to $44 million, while its defense segment also dropped 88% to $34 million, impacted by the aforementioned cost base revisions.

And finally, the company’s firm order backlog was at $17.4 billion at the end of the second quarter, compared to $19.5 billion at the end of the first quarter of 2018.

The jet delivery slump

In the second quarter of 2018, Embraer delivered a total of 48 aircraft (28 commercial and 20 executive jets) compared to the 59 aircraft (35 commercial and 24 executive jets) delivered in the same period last year. The highest number of deliveries in the reported quarter was of the E175 jets, comprising 20 deliveries out of the total 28.

It seems that the E175 has the highest demand out of Embraer’s portfolio. As of June 30, 2018, the company accumulated 622 firm orders of the aircraft with options for another 165 E175s. The deliveries of the jet amounted to 531. Right behind stands the E190 with 587 firm orders, 44 options, and a total of 551 jets delivered.

But the plane maker’s E2 Family jets are lagging behind. By a lot. The 175-E2 accumulated 100 firm orders and 100 options from the only customer, Skywest Airlines (U.S.); the 190-E2 reached 50 firm and 72 optional orders; and the 195-E2 has got 80 firm orders with 65 options. Irish lessor AerCap is the largest customer for both the 190-E2 and 195-E2 jets. But out of the three, only three jets – 190-E2s – were delivered as of June 30.

The KC-390 service entry delay

Embraer has delayed the entry into service of the multi-mission KC-390 medium-sized military aircraft with the Brazilian Air Force from late 2018 to 2019, Aviation Week informs.

It follows an accident on May 5, 2018, when a prototype of the aircraft, performing a ground-level test flight, suffered a runway excursion, Reuters reported at the time.

Embraer says it is still committed to delivering the first-production KC-390 to the Brazilian Air Force by end of 2018, but the delivery of the second-production aircraft is now pushed to 2019.



The KC-390 on flight display at the recent Farnborough International Airshow. Courtesy of Farnborough.