FILE PHOTO: An Embraer logo is pictured during the European Business Aviation Convention & Exhibition (EBACE) in Geneva, Switzerland, May 23, 2022. REUTERS/Denis Balibouse
By Gabriel Araujo
SAO PAULO (Reuters) – Brazilian planemaker Embraer SA (NYSE:ERJ) on Friday boosted its net revenue forecast for 2023 as it expects supply chain disruptions to gradually ease and aircraft deliveries to increase.
The company, which in 2022 met the lower-end of its $4.5-5.0 billion net revenue forecast, said it expects to reach a net revenue of between $5.2 billion and $5.7 billion this year, which would represent growth of as much as 27%.
The move comes as Embraer, the world’s No. 3 planemaker after Boeing (NYSE:BA) and Airbus, makes a shift into growth after years of recovery from the COVID-19 pandemic and a failed commercial aviation deal with Boeing, chief executive Francisco Gomes Neto told Reuters in an interview.
“Our financial turnaround is concluded,” he said. “After the pandemic and the Boeing deal, 2021 and 2022 were years of recovery. From 2023 onwards we will have years of growth.”
Embraer had already disclosed deliveries of 159 aircraft in 2022, meeting the target for executive jets but falling just short of its previous outlook for commercial jets.
Last year was marked by deliveries concentrated in the fourth quarter and supply chain disruptions, which Gomes Neto expects to improve in 2023 but only fully normalize next year.
In 2023, Embraer said, its commercial aircraft unit is forecast to deliver from 65 to 70 jets, up from 57 last year, with sales also set for a strong performance as travel rebounds post-pandemic, restoring the firm’s backlog to its pre-2020 level.
Recent deals include a firm order for six E195-E2 jets signed with Oman’s low-cost carrier SalamAir, as well as a deal for 20 aircraft with Canada’s Porter Airlines, an order of 15 E195-E2 from an undisclosed customer and a new order of five jets from Spanish carrier Binter.
“I haven’t seen a (sales) pipeline as strong as the current one for a long time,” Gomes Neto said, adding he expects another busy fourth quarter for the company this year as some supply issues are still in sight.
Executive jet deliveries, meanwhile, are seen jumping as much as 27.5% to a level between 120 and 130, the firm said.
Embraer also maintained for this year its forecast of a free cash flow of $150 million or more. Last year, Embraer started with an estimate of $50 million or better but ultimately zoomed to a $540 million total.
“We had a lot of challenges in 2022 – the war in Ukraine, inflation, supply chain constraints. But we delivered basically every guidance,” Gomes Neto said. “Free cash flow was the cherry on the cake”.