Embraer sees "faint signals" of new commercial activity

By Mary Kirby

Embraer is cautiously optimistic that it has seen the worst of the global economic crisis and that its commercial aviation business will start improving in a few months.

The Brazilian airframer is seeing "faint signals of some activity", said Embraer president and chief executive Fred Curado during a conference call to discuss the firm's first quarter net loss of $23.4 million.

The commercial landscape is "definitely more encouraging than the last time we spoke", he adds.

A pending deal to provide Aerolineas Argentinas with 22 Embraer 190s "is a very important campaign for us", says Curado.

The Embraer chief notes, however, that the deal - backed by Brazilian development bank BNDES - represents a "niche opportunity" since the airline "has desperate need for re-fleeting". As such, he says, the Aerolineas arrangement should not be seen as a definitive indicator that the market is on the upturn.

Nonetheless, Embraer "may be reaching a level now thathopefully the situation will start improving in a few months from now".

To assist with financing, Embraer will continue to depend on BNDES to support some clients. The airframer estimates that 25% of its 2009 deliveries will be financed by the bank.

The global recession has taken a significant toll on Embraer's business jet dealings. Fewer deliveries of business jets meant first quarter net revenue for the executive aviation segment fell 60% to $70.2 million.

While Curado does not see the business aviation segment improving dramatically, he does not believe it will get worse than the present "at least from our product line".