Embraer downgrades forecasts for business jet deliveries
August 2, 2016
Embraer has announced an 8% downgrade of its annual business jet delivery projections for 2016. The company’s management attributed the cut of production forecasts to the shifting market conditions. Something which is increasingly softening the volume of orders from customers. Embraer’s CEO, Paulo Cesar Silva, revealed the revised forecasts of the company’s annual business jet deliveries for the year. The announcement was then made during the second-quarter earnings call held on 29 July 2016.
A Dipping Trend for Embraer
“Having so far delivered 49 business jets during the first six months of the year, the company now expects to ship between 70 and 80 light jets by the end of 2016. Compared with its previous projection of between 75 and 85, and some 35 to 45 large jets. Compared with earlier estimates of between 40 and 50.”
This is according to Gregory Polek’s news article published at the AINonline website on 29 July 2016. Polek further estimates that the production cut has seen the annual revenue forecasts of Embraer dip. From the range of between $1.75 and $1.9 billion to the range of between $1.6 and $1.7 billion.
Indeed, the dipping trend of Embraer’s business jet orders in the first-half of 2016 indicated that the market would not change for the remainder of the year. The diminishing market prospects in the business jets manufacturing sector is largely being dictated by the industry-wide demand and supply dynamics. Polek quotes Silva as elaborating:
“The revisions to the guidance we are making today is in line with what the market is doing…we do not want to fight against the market. So we will no longer fight for the market share.”
Silva also remains unoptimistic about the short-term to the medium-term recovery of the market. Polek quotes him as saying: “No one expects that in the next two or three years this market will recover. We still have a lot of used aircraft in the market – around 11 per cent of used aircraft inventory compared to the size of the total fleet.”