Embraer (ERJ) Delivers 52 Jets To Its Customers In 2Q16

Embraer S.A. (NYSE:ERJ) announced that it delivered 52 jets to its customers in the second quarter of 2016. The deliveries were equally divided between the commercial aviation market and the business aviation market. Also, the deliveries were 18.2% higher than the first-quarter level. Embraer is among the leading manufacturers of commercial jets that seat up to 130 passengers.

Q2 Backlog

The company exited the second quarter with an order backlog of $21.9 billion, flat with the first-quarter 2016 level.

During the quarter, Embraer and Horizon Air signed a firm order for 30 E175 jets, with options for another 33 aircraft of the same model. Based on current list prices, the contract value will be $2.8 billion, if all options are exercised by the parties.

In the second quarter, Embraer and the Germany-based business charter operator, Air Hamburg signed an agreement under which Air Hamburg will buy yet another Legacy 650.

Farnborough Air Show

This international air show allows Embraer and other premier commercial jet manufacturers to demonstrate their premium products to customers worldwide. Thanks to Embraer’s quality product offering, it continues to receive orders for new aircraft at the air show. The orders received during the event will continue to increase the existing backlog of the company.

At the air show, Embraer entered into an agreement with Kalstar Aviation, an Indonesian regional operator, to deliver five E190-E2s. The contract also included 5 purchase rights for the same model, bringing the total potential orders to 10 aircraft. At current list prices, the entire value of the contract will be $582 million, if all options are exercised.

Long-Term Outlook

Embraer expects that demand for the 70−130+ seat category will be nearly 6,400 new jets in the next two decades. The company is well poised to benefit from the surge in demand for the 130 seat aircraft category.

Meanwhile, The Boeing Company’s (NYSE:BA) research report projects about 39,620 deliveries in the next two decades which include all categories of aircraft. The entire value of the new deliveries is assumed to be $5.9 trillion. The larger commercial aircraft category is being dominated by Boeing and Airbus Group (PA:AIR) SE (OTC:EADSY) .

The huge demand in the aviation market will accommodate the existing players as well as the new entrant in the jet manufacturing market, The Commercial Aircraft Corporation of China (COMAC).

Zacks Rank

Embraer S.A currently has a Zacks Rank #3 (Hold). A better-ranked stock in the aerospace & defense space is Northrop Grumman Corporation (NYSE:NOC) , currently carrying a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>