Embraer To Cut 20 Percent Of Workforce

February 20, 2009

Brazilian aircraft maker Embraer said on Thursday it will lay off about 20 percent of its workforce around the world and cut its delivery forecast for this year, citing a sharp downturn in the aviation market amid the global economic crisis.

With the announcement, Embraer becomes the latest company in Latin America's largest country to cut jobs and scale back production to cope with an economic slowdown that is punishing a wide range of industries around the globe.

Embraer, the world's leading manufacturer of regional jets seating up to 120 passengers, said the crisis forced it to lay off about 20 percent of its total workforce of 21,362 people. That works out to more than 4,200 job cuts.

"As a result of an unprecedented crisis afflicting the global economy, and in particular the aviation industry, it became unavoidable to revise our cost base and staffing levels," it said in a statement.

The company, which also makes business jets and military aircraft, cut its delivery forecast for this year to 242 jets from a previous estimate of 270. In November, it had already slashed the forecast from 350 planes.

With the new delivery forecast, Embraer estimates it will bring in USD$5.5 billion in revenue in 2009, much less than it had initially expected. It also cut its investment plan for this year to USD$350 million from USD$450 million.

Embraer chief executive Frederico Curado had said in December that aircraft orders should drop in 2009 as credit dries up globally and air travel slumps.

Embraer, whose main rival in the regional jet market is Canada's Bombardier, delivered a record 203 planes in 2008, 20 percent more than the previous year. But fourth-quarter deliveries fell to 59 units from 61 in the same period in 2007 on weaker demand.