Embraer Posts Quarterly Loss on Provision for AMR Plane

Embraer SA (EMBR3), the world’s fourth- largest airplane maker, rose the most in a month after reporting sales that exceeded analysts’ estimates.

Embraer gained 3.7 percent to 14.16 reais at 3:56 p.m. in Sao Paulo after rising as much as 5.2 percent earlier, the most since Feb. 15. The benchmark Bovespa index lost 0.4 percent.

Sales rose 9.7 percent to 3.67 billion reais ($2 billion) in the fourth quarter, beating the average estimate of 3.36 billion reais among three analysts surveyed by Bloomberg. The Sao Jose dos Campos, Brazil-based company posted a loss of 171.6 million reais in the quarter after booking a provision of 662.6 million reais for losses related to the possible return of 216 regional jets it sold to AMR Corp.

“The AMR writedown was unpleasant, but it’s wise for them to do this because I believe they’ll get a lot of those aircraft back,” Ray Neidl, an analyst at Maxim Group LLC, wrote in an e- mailed response to questions. “The outlook for commercial aircraft is still bright, and they have the AMR negative now taken care of.” Neidl rates Embraer a buy.

Embraer booked the provisions after AMR, the parent of American Airlines, sought bankruptcy in November. Of that total, 583.2 million reais are directly related to the likely return of the regional jets and 79.4 million reais are additional provisions related to other regional jets from Embraer’s ERJ-145 family, including planes operated by Mesa Air Group, which filed for Chapter 11 in January 2010.

The possible return of AMR planes may lead to an oversupply on the used-plane market, which led Embraer to increase provisions for the regional jets operated by Mesa, according to the earnings statement.

Embraer delivered 82 commercial and business jets in the fourth quarter, down from 92 a year earlier. The company’s order backlog was at $15.4 billion, according to the filing yesterday.

To contact the reporters on this story: Jose Sergio Osse in Sao Paulo at josse1@bloomberg.net; Katerina Petroff in Sao Paulo at kpetroff@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net

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