By Bjorn Fehrm
1 November 2016, ©. Leeham Co: Embraer reported slightly better than expected results for 3Q2016, with revenue up by 18% to $1,514m. Gross margin for the company is at a stable 19% (18% 3Q2015) and EBIT before one-off was $95m ($85m).
After one time charges, the result was a loss of $34m, attributable to a layoff program of $118m and additional charges in the Corruption affair the company has been involved in. The company reiterated its guidance for 2016, adjusted downwards in last quarters presentation.
The Commercial Aviation side delivered more aircraft than expected and Defense & Security increased revenue by 19%. The business jet side did not expand as planned. Despite the certification of new models (Legacy 450), the delivery of new business jets is stuck at about 50% below what was expected, around 25 units per quarter instead of more than double that at the end of 2015.
Embraer’s commercial aircraft best seller, the E175 being in Alaska livery. Source: Alaska Airlines.
While deliveries of commercial aircraft held up at 29 units, sales are not keeping pace with 17 aircraft sold in the quarter. Deliveries year-to-date are at 76 E-Jets while orders are at a low 51 for a book-to-bill of just 0.67.
Defense & Security stabilized with the KC-390 military transport program now progressing. The flight test program now has two aircraft.
Here the details of the financial results for the divisions and their aircraft programs: Read more
2017: the year ahead
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Introduction
Jan. 3, 2017, © Leeham Co.: The New Year is here and it doesn’t look like a good one for commercial aerospace, if measured against previous outstanding years.
There are some troubling signs ahead, piling on to a slowdown in orders from last year that didn’t even reach a 1:1 book:bill.
This year looks to be worse than last. Airbus and Boeing will give their 2017 guidance on the earnings calls this month and next. Bombardier and Embraer earnings calls are a ways off, when each will provide its guidance.
But LNC believes the Big Two in particular will be hard pressed to hit a 1:1 book:bill this year and may even struggle to match 2016 sales.
Boeing’s year-end order tally comes Thursday. Airbus’ comes on Jan. 11.
Summary
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Posted on January 3, 2017 by Scott Hamilton
Airbus, ATR, Boeing, Bombardier, CFM, Comac, CSeries, E-Jet, Embraer, Etihad Airways, Farnborough Air Show, GE Aviation, Irkut, Leeham News and Comment, Middle of the Market, Mitsubishi, Pratt & Whitney, Premium, Rolls-Royce, Sukhoi
Airbus, Boeing, Bombardier, CFM, Comac, Embraer, GE Aviation, Irkut, Mitsubishi, Pratt & Whitney, Rolls-Royce, Sukhoi
Resurgence for ERJ-145
Note: Nov. 24 and 25 are Thanksgiving Holidays in the US. Our next post will be Monday.
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Introduction
Nov. 23, 2016, © Leeham Co.: The 50-seat regional jet market is dead.
That’s the conventional wisdom.
Well, not quite.
Embraer ERJ-145 is finding new life with regional airlines.
Piedmont Airlines, a unit of American Airlines, is adding the 50-seat Embraer ERJ-145 to its fleet. Eleven joined so far and next year the company plans to add 24 more.
CommutAir, an operator for United Airlines, is adding the same aircraft type to its fleet. Forty of them.
Why the mini-resurgence?
Low fuel prices and cheap airplanes.
Summary
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Posted on November 23, 2016 by Scott Hamilton
Airlines, American Airlines, Bombardier, Embraer, Premium, Rolls-Royce, United Airlines
American Airlines, Aviation Specialists, Bombardier, CommutAir, CRJ-100, CRJ-200, Embraer, ERJ-145, Joel Hussey, Piedmont Airlines, Rolls-Royce, Tradewind Capital, United Airlines
UBS puts Sell rating on Embraer
Nov. 22, 2016: UBS resumed coverage on Embraer (NYSE: ERJ) today, rating the stock a Sell. It is the only Sell rating among seven analysts previously covering the
company; six are Buys and one is Hold. UBS rated ERJ Neutral prior to suspending coverage.
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5 Comments
Posted on November 22, 2016 by Scott Hamilton
Embraer
E175 E2, E175-E1, Embraer, UBS
US, EU ignore Chinese, Russian subsidies
Nov. 15, 2016, © Leeham Co.: Government subsidies to commercial aircraft companies appear to be increasing despite the 12-year disputes before the World Trade Organization between Europe and the US over Airbus and Boeing aid.
Yet the US and Europeans appear to be doing little to try and curb the subsidies to new competitors.
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15 Comments
Posted on November 15, 2016 by Scott Hamilton
Airbus, Boeing, Bombardier, China, Comac, CSeries, Embraer, Irkut, Lessors, Sukhoi, United Aircraft
737, 787-9, A319, A320, A330neo, A350, Airbus, Boeing, Bombardier, C919, C929, China, Comac, CS300, CS500, CSeries, Embraer, MC-21, Russia, United Aircraft Corp.
Clouds overhang Bombardier ahead of earnings call
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Introduction
Nov. 9, 2016, © Leeham Co.: Bombardier reports its 3Q2016 and nine month earnings Thursday and as the year prepares to enter its last 45 days, disappointment
hangs over the company and the stock.
Summary
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Posted on November 9, 2016 by Scott Hamilton
Airbus, Boeing, Bombardier, CSeries, Delta Air Lines, Embraer, Irkut, Mitsubishi, Pratt & Whitney, Premium
737-7, 737-700, A319, Air Canada, Airbus, Boeing, Bombardier, CS300, CS500, Delta Air Lines, Embraer, Irkut, Mitsubishi, Pratt & Whitney
Embraer 3Q2016 results: Stabilized situation
By Bjorn Fehrm
1 November 2016, ©. Leeham Co: Embraer reported slightly better than expected results for 3Q2016, with revenue up by 18% to $1,514m. Gross margin for the company is at a stable 19% (18% 3Q2015) and EBIT before one-off was $95m ($85m).
After one time charges, the result was a loss of $34m, attributable to a layoff program of $118m and additional charges in the Corruption affair the company has been involved in. The company reiterated its guidance for 2016, adjusted downwards in last quarters presentation.
The Commercial Aviation side delivered more aircraft than expected and Defense & Security increased revenue by 19%. The business jet side did not expand as planned. Despite the certification of new models (Legacy 450), the delivery of new business jets is stuck at about 50% below what was expected, around 25 units per quarter instead of more than double that at the end of 2015.
Embraer’s commercial aircraft best seller, the E175 being in Alaska livery. Source: Alaska Airlines.
While deliveries of commercial aircraft held up at 29 units, sales are not keeping pace with 17 aircraft sold in the quarter. Deliveries year-to-date are at 76 E-Jets while orders are at a low 51 for a book-to-bill of just 0.67.
Defense & Security stabilized with the KC-390 military transport program now progressing. The flight test program now has two aircraft.
Here the details of the financial results for the divisions and their aircraft programs: Read more
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Posted on November 1, 2016 by Bjorn Fehrm
Alaska Airlines, Embraer
E-Jet, E175, E175E2, E190, E190E2, E195, E195E2, Embraer, KC-390
Less desirable aircraft for lessors
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Introduction
Part 3: Oct. 24, 2016, © Leeham Co.: Lessors select aircraft to add to their portfolios based on several basic criteria:
Lessors often conclude that while an airplane may be good technically and perfectly acceptable for airline use, failure to meet their specialized key criteria—notably liquidity and customer base—they may pass on the aircraft.
Summary
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Posted on October 24, 2016 by Scott Hamilton
Airbus, Boeing, Bombardier, Comac, CSeries, E-Jet, Embraer, Irkut, Lessors, Mitsubishi, Premium, Sukhoi
AerCap, Airbus, Altavair, Boeing, Bombardier, Comac, Embraer, GECAS, Guggenheim Aviation Partners, ILFC, Intrepid Aviation, Irkut, Lessors, Mitsubishi, Sukhoi
Seventeen new, derivative aircraft to see EIS through 2020
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Introduction
Delivery of the first Bombardier CS300, to AirBaltic, next week kicks off entry-into-service for 17 airplanes through 2020. Bombardier photo.
Oct. 20, 2016, © Leeham Co.: The past decade was a hive of activity as the Big Four OEMs launched new airplane programs and put the aircraft into service.
Airbus launched the A320neo, A330neo and A350 families. The A330neo is under production; the other two entered service early this year.
Boeing launched the 787 in late 2003 (outside the decade mark), rolled it out in 2007 and entered service with it in 2013. The 737 MAX was launched in 2011 and is in flight testing. The 777X was launched in 2013; components are in production.
Bombardier launched the CSeries in 2008; it entered service this year, after three years of delays.
Embraer launched the E-Jet E2 om 2013. Flight testing began this year.
New Entrants
These were supplemented by new entrants into commercial aviation: COMAC with its C919; Irkut with the MC-21; and Mitsubishi with the MRJ90. Of these, only the MRJ90 is flying. After more than two years of delays and several false starts, flight testing began in earnest this week at Moses Lake (WA) with FTA-1 (Flight Test Aircraft 1).
Development and new program launches have slowed, but the next decade is hardly going to be idle.
Summary
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Posted on October 20, 2016 by Scott Hamilton
Airbus, Boeing, Bombardier, Comac, CSeries, E-Jet, Embraer, Irkut, Mitsubishi, Pratt & Whitney, Premium, Sukhoi
Airbus, Boeing, Bombardier, Comac, Embraer, Irkut, Mitsubishi, Sukhoi
Alcoa looks for weaker 2017: Weekly analyst synopsis
Oct. 20, 2016: This week’s analyst summaries focus on continuing delivery shortfalls at Airbus because of delays in receiving Pratt & Whitney GTF engines; continued expectations Boeing will reduce again the projected production rate of the 777 Classic; and a comment on Alcoa, a major supplier in metals to the commercial aerospace industry.
The Alcoa note, from Goldman Sachs, is of particular interest in that it looks ahead to 2017. Reading between the lines (which isn’t very hard in this case), Alcoa seems to be saying 2017 is going to see a further softening of demand for airliners.
Coupled with some yield concerns expressed by some airlines (not included in the notes below), it looks like 2017 may shape up to be an even softer year for orders than 2016.
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Posted on October 20, 2016 by Scott Hamilton
Airbus, Boeing, Bombardier, CSeries, Embraer, Pratt & Whitney
Airbus, Alcoa, Bernstein Research, Boeing, Bombardier, Credit Suisse, Embraer, Goldman Sachs
Pontifications: A good week for Boeing wide-bodies
By Scott Hamilton
Oct. 17, 2016, © Leeham Co.: Boeing had a very good week for wide-body orders last week. It recorded 42 orders for the 787 and 10 for the 777-300ER.
Thirty of the former and all of the latter came from Qatar Airways. There were 12 787 orders from “Unidentified,” which in this case was from China Southern Airlines. These were announced Wednesday but too late to show up on the weekly orders update posted Thursday.
787 Book:Bill
For the year, Boeing has 61 net orders for the 787, a healthy increase since the end of June, when the book-to-bill was a paltry 0.25 YTD. Even at 61, this is still a book:bill of just 0.42 for the 787, which has not had a book:bill of more than one since 2013. This means Boeing continues to burn off the backlog faster than it is booking new orders.
But it’s welcome news nevertheless in a year when there has been a dearth of wide-body orders.
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27 Comments
Posted on October 17, 2016 by Scott Hamilton
Airbus, Boeing, Bombardier, CSeries, Embraer, Mitsubishi, Pontifications
777-300ER, 787, A320NEO, A350, A380, Airbus, Barry Eccleston, Boeing, Bommbardier, CRJ, CSeries, E-Jet, Embraer, Mitsubishi, MRJ100, MRJ70, MRJ90
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