Company News

UPDATE 1-Embraer's backlog hits five-year low as sales slump

(Adds details of backlog, competitive context, market reaction)

SAO PAULO, Oct 19 (Reuters) - The value of firm orders for Embraer SA’s planes fell to its lowest point in more than five years, the company said on Friday, on a canceled JetBlue Airways Corp order and doubts about a new plane aimed at the U.S. regional jet market.

Embraer’s backlog, a gauge of future revenue, fell to $13.6 billion at the end of September, according to a securities filing. The indicator fell from $17.4 billion in June and $18.8 billion a year ago, hitting its lowest level since March 2013.

Deliveries of commercial planes also fell sharply in the third quarter to 15 commercial aircraft, compared to 25 a year earlier. Deliveries of private jets rose to 24 aircraft, from 20 planes a year before.

Embraer shares slipped nearly 1 percent in early trading, while the benchmark Bovespa stock index rose over 1 percent.

The company said its backlog fell largely due to the removal of two orders. JetBlue canceled an order of 24 planes after announcing in July that it would use Airbus jets to replace its aging Embraer fleet.

Embraer also said it had dropped a 100-plane order from Skywest Inc from the backlog due to uncertainty about whether pilots will agree to fly its E175-E2 for U.S. regional carriers.

Sales of Embraer’s commercial jet have faced headwinds this year as it transitions to a new line-up and starts competing with Airbus SE.

Embraer is in the process of selling 80 percent of its commercial jet division to Boeing Co. Its next-generation E-Jets compete in the market for passenger jets with just over 100 seats against the CSeries line-up designed by Bombardier Inc and recently acquired by Airbus.

Boeing and Embraer’s commercial aviation partnership, which would consolidate a global passenger jet duopoly, still requires the approval of shareholders and authorities in Brazil and other major aviation markets.

Once those hurdles are cleared, the challenge for Embraer will be turning around its remaining executive and defense divisions, both of which are currently lossmakers.

Embraer did not report how much of its backlog is due to commercial plane orders or private jet orders. (Reporting by Marcelo Rochabrun Additional reporting by Ana Mano Editing by Brad Haynes and Susan Thomas)