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Embraer, Profitable Again, Unveils Turboprop Plans

Arun Sivasankaran - : Aug 15, 2021 - : 3:18 am

The turnaround seems to be happening for Brazilian planemaker Embraer.

The company, which has had to deal with both the effects of the pandemic and a deal with Boeing that never took off, posted its first quarterly recurring profit in more than three years on Friday.

Embraer reported second-quarter net income of 212.8 million reais (US$40.5 million), its first recurring profit since the first quarter of 2018. The recovery is driven by a partial recovery in travel.

The performance this quarter is a big improvement from a year earlier when the company, reeling under the effects of the pandemic and the failed US$4 billion deal with Boeing, posted a loss of 1.071 billion reais.

Embraer is poised to post a stronger performance next year, Chief Financial Officer Antonio Carlos Garcia said on a call with analysts. He added that the company is “very optimistic” about finding a partner for the proposed turboprop.

The company has been on the lookout for a partner to develop a new turboprop. The introduction of the new aircraft would enable the company to strive for a substantial portion of a market that is currently dominated by ATR.

The company’s plans for the turboprop comes in the background of a slow revival in air travel, The recovery is spurred mainly by domestic travel, with international travel still only a fraction of what it was before the pandemic. Turboprops, which are said to be more efficient on shorter trips, are likely to be become an attractive option for carriers to use on shorter domestic routes.

According to the company, revenue, which more than doubled in the second quarter to US$5.922 billion, is likely to be between US$4 billion and US$4.5 billion, with an adjusted EBITDA margin of 8.5% to 9.5%. Free cash flow should be at breakeven, with a cash burn of up to US$150 million seen this year.

Embraer’s new concept for the turboprop would feature engines mounted at the rear of the aircraft, an unusual change from the more conventional wing-mounted engines, the company’s chief commercial officer, Arjan Meijer, said on Twitter. The company is yet to announce the name of the company that would make the engines. Pratt and Whitney currently supplies all turboprop engines, but GE Aviation is working on a competing model.

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