Embraer says US Airways delivery unlikely in 2004
Brazilian aircraft manufacturer Embraer said on Tuesday it was unlikely to deliver more planes to US Airways' this year and may even have to take back seven jets if the carrier goes out of business.
On Monday, Empresa Brasileira de Aeronautica (Embraer) posted a third quarter net profit that was more than four times the size it was last year, but its account receivables and stocks rose after US Airways, one of its biggest clients, suspended its order following its filing for bankruptcy protection in September.
Embraer's account receivables increased after it temporarily financed the sale of seven of the 22 EMBRAER 170 jets US Airways bought before it suspended its order. The other 15 planes were financed by GE Capital Aviation Services (GECAS).
Antonio Luiz Pizarro Manso, chief financial officer at Embraer, said US Airways aimed to come out of bankruptcy protection in the second quarter of next year.?
"If that happens and everything is sorted out, we will certainly be structuring the definitive financing," he told a conference call.
But he also said, "There is always the risk that if they (US Airways) are declared bankrupt, then we will have to take back those (seven) planes and place them elsewhere."
Embraer, which is the world's fourth-largest civilian aircraft manufacturer, said the airline's payments were in order and it had also already paid 15 percent of the value of the 70-seat EMBRAER 170 aircraft in cash.
The company's stocks also rose in the third quarter as it held onto four EMBRAER 170s which were ready to be delivered to US Airways when it suspended its order.
"As for the four aircraft we have in stock, we are waiting for some definition in the structure of US Airways," Manso said. "Then we will decide whether to deliver or not, or whether those aircraft will be reconfigured for another client."
In October Embraer, which competes with Canada's Bombardier Inc., cut its forecast for deliveries for 2004 to 145 aircraft from 160 after US Airways filed for bankruptcy protection and suspended its order for 85 planes after receiving just 22 aircraft.
Embraer stock was 0.5 percent weaker at 20.25 reais in early afternoon trade in Brazil. The country's benchmark Bovespa stock index was down 1.1 percent at the time.
(From Reuters, November 16, 2004)
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