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Company of the Year: Embraer
Latinvex names Brazilian aircraft manufacturer Company of the Year.
BY JOACHIM BAMRUD
While Brazil is still considered a developing country, experts have long pointed to the country also boasting world-class companies and executives.
One of the brightest stars is plane manufacturer Embraer, which not only is seeing growth in revenues, profits and plane orders, but is also increasingly seen as a potential rival to Boeing, which is suffering from declining orders and a crisis in safety confidence.
Five years ago, Boeing planned to acquire 80% of Embraer for $4.2 billion, but the US planemaker pulled out of the deal in 2020 (and four years later agreed to pay Embraer $150 million for breaking the deal).
At a quarterly earnings call in April, American Airlines CEO Robert Isom praised Embraer while criticizing Boeing.
“I want to give a shout out to Embraer,” he said, according to Fortune. “They have delivered day in and day out, throughout the pandemic, no matter the concerns of their supply chain.”
When asked about delivery delays from Boeing, however, Isom had a different message: “Get your act together.”
Embraer is reportedly exploring the idea of creating a next-generation narrow-body jet, the Wall Street Journal reported in May.
Embraer’s new aircraft would take on Boeing’s 737 Max jets and Airbus’ A320 aircraft and would mark the smaller company’s first attempt at direct competition against the two aerospace giants, which effectively control the market for planes with more than 130 seats, the Journal reported.
Embraer was originally started as a Brazilian government company in 1970, but was privatized in 1994. In addition to commercial aircraft, it also produces military airplanes, solutions in air traffic management and control, border control, communications, naval systems, space systems and cyber-security. Its light attack aircraft A-29 Super Tucano is used by the air forces of the United States, Brazil, Chile, Colombia and the Dominican Republic.
REVENUE, PROFIT GROWTH
Embraer posted revenues of $5.3 billion in 2023, an increase of 16% from 2022. It posted a profit of $164.3 million compared with a $203.5 million loss in 2022.
Full 2024 figures are not yet ready, but the Brazilian planemaker is on track for another good year. During the first nine months this year the plane maker saw revenues reach $4.1 billion, a 24% jump from the same period in 2023. Profits reached $288.5 million compared to only $1.9 million a year earlier. The profit figure for the first nine months this year is also 76% higher than all of last year.
Deliveries grew 33% in the third quarter and the company reached a new $22.7 billion backlog record.
In September, Fitch Ratings upgraded Embraer S.A.’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to ‘BBB-‘ from ‘BB+’ and affirmed its National Scale Rating at ‘AAA(bra)’, with a stable outlook.
Embraer’s top commercial aircraft clients are US airlines Skywest, American Airlines and Republic Airlines. Other major clients include Porter (Canada), Azul (Brazil) and Aercap (Ireland). The news in October about a deal between Azul and its lessors to swap more than $500 million in obligations for an equity stake is good news for Embraer, analysts say, as it reduces concerns about the debt load of a key customer.
FUTURE
Embraer is now developing electrical airplanes, including through its unit Eve, one of a bevy of startups worldwide developing battery-powered aircraft that can take off and land vertically to ferry travelers on short city trips, allowing them to beat traffic.
Artist rendering of an eVTOL Aircraft from EVE using the United brand. (Image by United)
The firm expects its electric vertical take-off and landing (eVTOL) aircraft to obtain certification and enter service in 2026, and has amassed nearly 3,000 potential orders ahead of production with potential revenue of $14.5 billion, Reuters reports.
Embraer is also developing separate electrical airplanes under its Energia project.
“Our Energia project is exploring a range of sustainable concepts to carry up to 50 passengers,” it says. “This project is considering a number of energy sources, propulsion architectures and airframe layouts to reduce our carbon emissions starting from 2030 – a key step in our goal to be net carbon neutral by 2050.”
As a result of its strong growth and significant potential, Embraer has been named Company of the Year by Latinvex.
© Copyright Latinvex
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