Due to the severe worldwide economic downturn since September 2008, Embraer recorded cancellations of some of the firm orders of its executive aviation backlog. As a result, the Company’s firm order backlog on March 31, 2009 decreased by 5.7 percent compared to the previous quarter, totaling US$ 19.7 billion.
In 1Q09, Embraer delivered 40 jets to the commercial and executive aviation segments, or a reduction of 11.1 percent when compared to 45 jet deliveries in the first quarter of 2008.
In light of this new scenario, Embraer revised its revenue guidance for 2009 to US$ 5.5 billion, including $0.8 billion for the executive aviation segment. The company has also reduced its delivery guidance for 2009 down from 270 to 242 commercial and executive aircraft deliveries with 17 Legacy 600 and Lineage jets plus 110 Phenom jets to the same segment.
As a consequence of the unprecedented crisis affecting the global economy, which also affected the air transportation industry, it had become inevitable to implement a revision of the Company’s cost structure and workforce, adjusting it to the new reality of demand for commercial and executive aircraft. A reduction in personnel (layoffs) carried out in February, 2009 involved approximately 20 percent of the Company’s workforce and was concentrated in the production and administrative areas, including the elimination of one layer in the management structure.