SAO PAULO (Reuters) - Embraer SA reported a $42.5 million loss for the first quarter on Wednesday as revenue fell in its three main divisions due to fewer plane deliveries and as the Brazilian planemaker burned through cash in preparation for a deal with Boeing Co.
Revenue fell most sharply, by 26% to $281 million, in its commercial aviation segment in the three months ended March 31. The company delivered 11 commercial jets in the quarter, three fewer than a year earlier. Overall, revenue fell 14.1%.
Embraer also released results in Brazil’s local currency, the real, which showed revenue was largely stable, positively affected by the depreciation of the currency against the U.S. dollar. Still, only 10% of Embraer’s revenue and 20% of its expenses are in reais, the company said.
Unlike its two other divisions, executive jets and defense, selling commercial passenger jets of up to 150 seats had been profitable for Embraer in recent quarters.
Embraer is in the middle of a large-scale transformation after it obtained shareholder approval to sell 80% of its commercial aviation division to Boeing for $4.2 billion, a deal that still needs regulatory approval.
Competition for the kind of medium-sized passenger jets that Embraer manufactures has increased recently, especially after Airbus took a controlling stake in the division of Canada’s Bombardier that competes directly with the Brazilian planemaker’s commercial jets division.
As a result of the deal with Boeing, Embraer will have to rely heavily in the short term on the profits it can generate from its executive jets and defense divisions.
The company said in a securities filing that the first quarter of any given year is usually weak and restated its forecast for the year, saying it expects to increase the pace of plane deliveries in the next quarters.
Additional reporting by Marcelo Rochabrun; Editing by Bernadette Baum