Embraer sees no further cuts to E-Jet production ahead

SAO PAULO Tue Feb 5, 2013 1:20pm EST

SAO PAULO (Reuters) - Brazilian planemaker Embraer SA (EMBR3.SA) does not expect further cuts to its commercial jet output in coming years, executives said on Tuesday, after laying out plans to trim production of regional E-Jets by as much as 15 percent in 2013.

A drought of major orders for much of last year forced Embraer to slow the assembly lines in its core commercial jet division, Chief Executive Frederico Curado said, but he dismissed the idea of cutting regional jet output again soon.

"I don't see any significant increase or decrease. We certainly do not expect to reduce (production) further," Curado told analysts on a conference call. "I think the bear case is flattish production through the next few years ... There is upside potential, depending how much market share we grab from campaigns in the United States."

Embraer and its chief rival for the regional jet segment, Canada's Bombardier Inc (BBDb.TO), have each landed a hefty order since December, tapping what they hope will be a flood of fresh demand from major U.S. carriers.

The Brazilian planemaker already has firm orders to absorb between two-thirds and three-quarters of 2014 regional jet output at this year's production levels, Curado said. He added that Embraer expected to book orders for more E-Jets than it delivers this year.

E-jets are designed to carry 70 to 120 passengers.

Embraer shares rose 0.9 percent in Sao Paulo, after touching a nearly five-year high in early trading.

A rebounding executive jet division and fast-growing defense unit mean sales of regional jets, which made up more than two thirds of revenue five years ago, should add just 52 percent of 2013 revenue, Embraer said in a Monday filing.

(Reporting by Brad Haynes; Editing by Gerald E. McCormick and Bob Burgdorfer)

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