Takeaways From Embraer SA (ADR) (ERJ) Earnings

On Embraer SA (ADR) (NYSE:ERJ)’s earnings call, CEO Frederico Curado noted that The Boeing Company (NYSE:BA) and Airbus have up to 35% of their respective backlogs committed to aircraft lessors, and that Embraer intends to raise its current level of 16%-20% of sales to lessors closer to the percentages enjoyed by its much larger peers.This is a shrewd move for Embraer, as its popular E-Jet series, a smaller commercial airplane with a sweet spot of around 75 seats, is sought after by major domestic airlines, but also smaller regional airlines that may be more inclined to use lessors in building their fleets versus the higher upfront costs of purchasing directly.

What to make of this earnings release
While the production rate in the first half of the year leaves something to be desired, Embraer SA (ADR) (NYSE:ERJ) is enjoying great demand from regional airlines for its commercial jets. With a robust backlog, the company should be able to focus on speeding up deliveries and finding a few percentage points of margin from productivity initiatives currently under way. If you hold Embraer, you’ll want to monitor plane deliveries for the back half of the year over the next two quarters. For now, Embraer remains a great, thematic long-term play in the airline manufacturing industry.

The article 4 Key Takeaways From Embraer Earnings originally appeared on Fool.com.

Fool contributor Asit Sharma has no position in any stocks mentioned. The Motley Fool recommends Embraer.

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