Embraer S.A. ERJ recently announced its deal with a private jet company, NetJets, for the delivery of Praetor 500 jets. The deal signifies the efficiency and reliability of Embraer jets in witnessing strong orders and the strengthening business relationship between the two companies. NetJets has been the buyer of Embraer’s jets for more than a decade and owns a family of 120 Embraer aircraft.
Valued at more than $5 billion, the deal involves the delivery of 250 Praetor 500 jets to NetJets and highlights other comprehensive support services for the jets. The deliveries are scheduled to begin in 2025.
Importance of the Praetor 500 Jet
The Praetor 500 is the world's most disruptive and technologically advanced midsize business jet. It boasts an impressive best-in-class range, with industry-leading speed and unparalleled runway performance. In terms of technology, it's the only aircraft in its category with full fly-by-wire flight controls.
Such features have enabled ERJ to witness a strong inflow of orders for the jet, like the latest one. The orders continue to build on Embraer’s business growth and boost its revenue generation prospects.
Per the report released by the International Air Transport Association in March 2023, the recovery of global passenger traffic measured by Revenue Passenger Kilometers (RPK) has been strong, reaching 88% of the 2019 level.
Total global RPKs are expected to increase by 20% in 2023. Moreover, the ease of traveling restrictions in China should add to the recovery of the industry. Such solid opportunities prevalent in the air travel business should boost the growth of Embraer’s commercial aviation business.
Opportunities for Peers
Aerospace majors’ — Airbus SE EADSY, Textron TXT and Boeing BA — business prospects also partially align with the continuing recovery of the air travel demand and are likely to benefit from the rebound.
Airbus boasts an order backlog of 7,254 commercial aircraft as of Mar 31, 2023 compared with the order backlog of 7,023 commercial aircraft as of Mar 31, 2022.
The Zacks Consensus Estimate for Airbus’ 2023 earnings has been revised upward by 4%. The Zacks Consensus Estimate for EADSY’s 2023 sales implies a growth rate of 17.7% from the prior-year reported figure.
Textron’s Textron Aviation business segment revenues increased 10.5% year over year to $1,149 million in the last reported quarter. The order backlog at the end of the quarter was $6.5 billion.
Textron boasts a long-term earnings growth rate of 11.2%. The Zacks Consensus Estimate for TXT’s 2023 earnings suggests a growth rate of 27.2% from the prior-year reported figure.
Boeing delivered 130 commercial planes during the quarter under review, up 37% year over year. The backlog for commercial airplanes remained healthy, with more than 4,500 airplanes valued at $334 billion.
Boeing boasts a long-term earnings growth rate of 4%. The Zacks Consensus Estimate for BA’s 2023 sales suggests a growth rate of 18.4% from the prior-year reported figure.
In the past year, shares of Embraer have rallied 35.8% against the industry’s decline of 3.7%.
Image Source: Zacks Investment Research
Embraer currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report