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Embraer books strong deliveries, new U.S. order

Reuters

By Brad Haynes

(Reuters) - Embraer SA, the world's third largest commercial planemaker, booked its strongest commercial deliveries in two years and rebuilt its order book with a 50-jet deal on Monday, lifting shares to an all-time high.

At the Farnborough International Airshow in England, U.S. regional operator Trans States Holdings ordered Embraer's next-generation E-175 aircraft for delivery beginning in 2020, with options for 50 more jets, worth $2.4 billion (1.40 billion pound) at list prices.

Embraer shares rose as much as 5 percent to a record intraday high on the Sao Paulo stock exchange.

Solid second-quarter indicators also bolstered the stock, as Embraer reported delivering 29 regional jets in the period, up from 22 commercial planes in April-June 2013. It was the strongest quarter for Embraer's regional jets since the 35 aircraft delivered in the second quarter of 2012.

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The results highlighted a solid outlook for Embraer's commercial jet business, reinforced by a positive 20-year forecast also released on Monday. Regional jets have ceded ground in Embraer's portfolio to business aviation and defence contracting, but still contribute just over 50 percent of its revenue.

The Brazilian planemaker has dominated regional jet orders in recent years after a long-running rivalry with Canada's Bombardier Inc, which has shifted its focus to the larger CSeries aircraft in a bid to take on Boeing Co and Airbus Group.

New competitors from Japan, Russia and China are likely to challenge Embraer's supremacy in the 70- to 130-seat segment, which is seen reaching 6,250 deliveries over the next 20 years.

Only 56 percent of those new planes will be needed to replace ageing aircraft, while 44 percent represent market growth, according to Embraer's 2014-2033 industry forecast.

Trans States Holdings controls Compass Airlines, GoJet Airlines and Trans States Airlines, which operate regional routes for U.S. carriers including United Continental Holdings Inc and Delta Air Lines Inc.

(Additional reporting by Alberto Alerigi Jr.; Editing by Jeffrey Benkoe and Paul Simao)