* Sales kickoff for KC-390, new E-Jets may boost backlog
* AMR most likely US candidate for major contract - exec
* CEO says close to meeting 2012 revenue and profit goals
By Brad Haynes and Cesar Bianconi
SAO PAULO, Dec 12 Brazilian jet maker Embraer SA
aims to rebuild its depleted order backlog next year
with two major new offerings -- a military cargo plane and a
re-engined family of regional jets -- executives said on
With approval from its board of directors and a new engine
supplier selected "within the next few months," Embraer plans to
overhaul its E-Jet lineup, Paulo Cesar de Souza e Silva, head of
Embraer's commercial aviation unit, told reporters.
The existing E-Jet family has made Embraer the world's
largest regional jet maker, but Canada's Bombardier
won a major order from Delta Air Lines last week,
helping to steal the 2012 sales lead and reignite an historic
Embraer hopes to regain the advantage with its next
generation of E-Jets, offering as much as a 15 percent boost in
fuel efficiency. It is also betting on its defense unit to
offset volatile cycles in the airline industry.
The company's KC-390 military tanker and cargo jet should
have a price set next year, allowing clients to book firm
orders, said Luiz Carlos Aguiar, head of the defense unit, which
has grown faster than expected this year.
The defense division's outperformance has helped to offset
canceled commercial and private jet orders this year, and Chief
Executive Frederico Curado said Embraer is close to meeting its
2012 revenue and profit margin targets.
"We hope to grow again in 2013, even if it isn't major
growth," Curado said at a year-end event held by the company.
Shares of Embraer fell 1.3 percent in Sao Paulo trading to
13.47 reais, while the benchmark Bovespa stock index
edged up 0.1 percent.
A lack of major regional jet orders drained Embraer's
backlog, a pipeline of future revenue, to a six-year low in
September, leading several analysts to suggest the company may
have to cut back production next year.
Embraer has stuck with an outlook for stable regional jet
output in 2013 if it can book new orders early in the year.
Curado said the company expects to keep its payroll stable in
2013, after rising wages drove up production costs in recent
BIG AMERICAN ORDER AHEAD
The most likely candidate for a major order in coming months
is American Airlines, Silva said, after its parent AMR Corp
negotiated a new labor deal allowing larger planes in
its regional fleet.
Embraer is in preliminary talks with American Eagle, which
can now fly more than 200 jets with up to 76 seats, Silva said,
adding that the airline was likely to request formal bids from
aircraft makers in coming weeks. Sales campaigns with US Airways
and United Continental also promise big orders,
Silva said 2013 "is looking to be a better year from a sales
perspective, as the big U.S. airlines close deals to renew their
fleets over the next 18 months."
The re-engined E-Jets could also boost sales in the second
half, along with the new KC-390, although delivery of the new
aircraft will have to wait until 2018 and 2015, respectively.
After Embraer revamps its E-Jet family, Silva said he could
see the company developing a new aircraft with up to 150 seats
entering service after 2025. He said such a development would
depend on whether industry giants Boeing and Airbus opt
to develop larger versions of their narrow-body airliners.
The Brazilian Air Force's investment in developing the
KC-390 has already boosted Embraer's top line, helping the
defense unit generate about $1 billion in revenue this year,
above forecasts for $900 million to $950 million.
In February, Embraer forecast net revenue of $5.8 billion to
$6.2 billion this year. The company updated its profitability
outlook in July to reflect expectations that earnings before
interest, taxes, depreciation and amortization, or EBITDA, would
equal between 12.5 percent and 13.5 percent of revenue.