Brazil's Embraer plans to cut around 4,200 jobs

Monday, February 23, 2009

Brazilian aerospace conglomerate Empresa Brasileira de Aeronáutica, S. A. (Embraer) has revealed plans to cut around twenty percent of the company's workforce of 21,362 people. Twenty percent is over 4,200, but Embraer have not revealed exact numbers.

The firm has also scaled back predictions for deliveries and revenue. Estimated delivery figures for 2009 now stand at 242 airliners and corporate jets, compared to the previous number of 270, in the second downwards revision of Embraer of their delivery figures for this year within three months. Revenue for 2009 is now predicted to be US$5.5 billion, down thirteen percent from the previous estimate of US$6.3 billion.

Embraer is the world's fourth-largest airframer, following Airbus, Boeing and Bombardier. Embraer stock fell 1.9% after the announcement, or 16 centavos, to 8.46 reais in São Paulo. Over the last twelve months Embraer stock has fallen 55%. The manufacturer also produces military aircraft, but statistics for these are not published.

In December, the Metalworkers Union of São José dos Campos, claimed the firm planned to cut 4,000 jobs, which Embraer at the time denied. Embraer said they would only take "such a drastic decision if there are risks to the company’s profitability and sustainability." The new statement said that production and administration would take the brunt of the cuts, with engineers retained to continue product development.

The company described the decision as vital given "the new reality of demand for commercial and executive aircraft," and noted that "over 90 percent of its revenues are generated abroad. Therefore, the resiliency that the Brazilian domestic market has been demonstrating through the crisis does not significantly alter this adverse scenario."

The official news agency Agência Brasil reported that Brazilian President Luiz Inácio Lula da Silva was upset by the layoffs. He will meet with company directors next week and wants Embraer to explain the decision.

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Sources

"Brazil wants Embraer plane co. to explain layoffs" — Forbes, February 21, 2009
"Brazil's Embraer plane maker slashes 20 pct of work force as crisis slows jet sales" — Los Angeles Times, February 19, 2009
"Embraer to Cut Workforce by 20%, Deliver Fewer Planes" — Bloomberg L.P., February 19, 2009

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