December 9, 2009 / 6:57 PM / 8 years ago

Embraer says Brazil sales help offset global drop

SAO PAULO, Dec 9 (Reuters) - Brazil’s Embraer (EMBR3.SA)(ERJ.N), the world’s third-largest aircraft maker, will likely sell a record $500 million worth of planes in Brazil this year, helping offset a tumble in global demand amid the worst civil aviation market in years, its chief executive said on Wednesday.

Overseas demand for commercial and executive jets will remain weak during 2010, Frederico Curado told reporters at an event in Sao Paulo. But domestic business remains promising, bolstered by sales to Brazilian airlines Azul and Trip, he added.

“The market (abroad) remains rather depressed; the airlines are losing money and will keep losing money next year,” Curado said.

Curado was also upbeat about prospects for sales of its Phenom-100 executive jet. Local sales will make up for about 10 percent of the company’s projected revenue this year.

Revenue at Sao Jose dos Campos-based Embraer, which sells most of its planes outside Brazil, suffered this year as it sold more of its smaller, less expensive planes because of the fallout in global aviation. The company expects revenue to drop 10 percent this year, in line with previous forecasts.

Embraer shares fell 1.2 percent to 8.78 reais in mid-afternoon trade on Wednesday. They have gained 0.6 percent this year, compared with an 80 percent surge in the Bovespa index .BVSP.

Analysts including Bank of America Merrill Lynch’s Ron Epstein are concerned the jet maker may need to do more than trim payroll expenses and renegotiate prices with suppliers to cope with the worst crisis in commercial aviation since the end of World War II.

    Operating margins will probably hit the lowest level in a decade as measured by U.S. accounting guidelines, the analysts estimate.

    Curado said he expects Brazil’s state-run development bank BNDES to extend more credit to buyers of Embraer planes next year.

    He estimates that BNDES will make financing available to cover 60 percent of the aircraft Embraer will deliver in 2010, up from 30 to 35 percent of sales in that category in 2009. (Reporting by Cesar Bianconi; Writing by Guillermo Parra-Bernal; Additional reporting by Luciana Lopez; Editing by Gerald E. McCormick)

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