“Executive Aviation delivered 27 jets in Q2, compared to 30 aircraft in the same quarter of 2023,” said Antonio Carlos Garcia, the company’s chief financial officer during the earnings call.

Despite the revenue dip, the division’s profitability improved. Gross profit margin increased to 20% from 19.8% in the previous quarter, although gross profit itself fell by 10% sequentially.

More impressively, operating income (EBIT) surged 14% compared to the first quarter, driven by a wider EBIT margin of 11.3%.

“In executive aviation, we continue to capitalise on the good sales momentum in both fleet and retail markets, with solid demand across our product portfolio,” added Francisco Gomes Neto, Embraer chief executive officer. “In executive aviation, we recorded the strongest first semester in terms of revenues and deliveries for the division over the past 10 and 8 years, with $575m and 45 aircraft.”

Aircraft deliveries were up from the first quarter but below the same period in 2023. The company delivered 27 executive jets, comprising 20 light jets and seven mid-size jets. While this represents an increase from the previous quarter, it falls short of the 30 jets delivered in the second quarter of 2023.

The light jet category saw growth, with deliveries of the Phenom 300 up 80% compared to the first quarter. However, deliveries of the Phenom 100 were significantly lower.

In the mid-size segment, deliveries of the three Praetor 500 and four Praetor 600 remained flat compared to the previous quarter but declined from the same period last year.

Overall, the company maintained its 2024 outlook of 125-135 executive jet deliveries.

Embraer order backlog remained unchanged at $4.6bn compared to the first quarter.

Overall, the company’s total backlog for executive, commercial and services segments hit a seven-year high of $21.1bn, up 20% year-over-year.

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The deal, which will improve company’s liquidity position, is an extension of a $650m syndicated credit operation announced in October 2022.

The Brazilian firm obtained a revolving credit facility of $650m in October of 2022, as well as a credit transaction guarantee of $100m by JP Morgan and UK Export Finance to finance suppliers.

“The extension of a significant syndicated credit line reinforces Embraer’s liquidity for the next five years, providing important support for our long-term strategy. Our partnership with strong and marquee financial institutions reinforces Embraer’s credit quality,” highlighted Antonio Carlos Garcia, CFO, Embraer.

The syndication was led by PNC Bank, Crédit Agricole, Citibank, and with the participation BNP Paribas, Mizuho, Bank of America, Sumitomo Mitsui Bank Corporation, Natixis, JP Morgan, MUFG, Santander, Banco do Brasil, Commerzbank, Morgan Stanley, Bradesco, and Goldman Sachs.

The company said the extension of the credit line will be used by Embraer’s subsidiaries in the US and the Netherlands.

Earlier this year, S&P Global Ratings raised Embraer’s rating from “BB+” to “BBB-” and maintained a stable outlook citing the company’s strong cash generation amid higher aircraft deliveries. 

Embraer delivered 27 executive jets in the second quarter of 2024 up from 18 in the first quarter of 2024 but lower than 30 in the same period last year. The company’s backlog stayed flat at $4.6bn in comparison with the first quarter of 2024.

Embraer’s average loan maturity at the end of first quarter of 2024 decreased to 4.4 years compared to 4.6 years in the preceding quarter of last year. The term structure of loans was 96% in long-term contracts and only 4% in short-term ones.

In terms of cost of loans, the company’s cost of USD denominated loans decreased to 6.19% per annum in 1Q24 from 6.33%pa in 4Q23, while the cost of Brazilian real-denominated loans decreased to 6.69% compared to 7.11%, respectively.

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