March 26, 2020 / 5:36 PM / 15 days ago

Planemaker Embraer posts fourth-quarter loss, suspends 2020 guidance due to coronavirus

FILE PHOTO: An Embraer ERJ-190AR airplane of Azul Brazilian Airlines prepares to land at Santos Dumont airport in Rio de Janeiro, Brazil March 21, 2019. Picture taken March 21, 2019. REUTERS/Sergio Moraes/File Photo

(Reuters) - Brazilian planemaker Embraer on Thursday reported a net loss of $209.8 million for the fourth quarter of 2019, as the manufacturer grappled with the coronavirus pandemic that so far has led it to suspend production in Brazil.

The company also produces some executive jets in Florida, where production continues.

Embraer said it had not seen significant change in demand in light of the coronavirus outbreak, but suspended its 2020 financial guidance regardless.

In a conference call with analysts, Embraer’s Chief Executive Francisco Gomes Neto said they have received requests for deferrals for planes scheduled to be delivered this year that will instead be delivered in 2021. He declined to specify how many requests they have received.

Embraer is in the final stages of a $4.2 billion deal with Boeing that has suffered multiple delays due to a strict antitrust review in the European Union. The EU is now expected to issue its decision after June 23, Embraer said.

Some analysts say the deal is at risk because Embraer’s share price has fallen extensively in recent months and Boeing is suffering from an unprecedented crisis due to the grounded 737 MAX planes following two deadly crashes and the coronavirus outbreak that has led to a collapse in demand for air travel.

Embraer is spending an additional $10 million to $15 million per month to keep the company running in a way that it is ready for the deal with Boeing to close, as it awaits regulatory approval. Gomes Neto said the Boeing deal remains strategically important to Embraer, mirroring statements by the U.S. planemaker that recently said the deal remained strategically important to them.

Embraer also disclosed an impairment charge of $71.6 million in its executive jets division and $54 million in costs related to the Boeing deal that weighed over its fourth-quarter net income result.

Reporting by Marcelo Rochabrun; Editing by Bernadette Baum and Marguerita Choy

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