Embraer expects its commercial aviation business to continue to lose money next year as the division remains in recovery mode despite an expected acceleration of E-Jet deliveries, CEO Francisco Gomes Neto conceded during the company’s third-quarter earnings call Tuesday. Neto added he doesn’t expect E-Jet sales to increase much beyond the anemic volume of 2020—a year that saw Embraer collect an order for 20 E175s from SkyWest in January but virtually no further commercial aircraft orders since the Covid outbreak and several delivery deferrals to at least 2022. However, the company suffered no order cancellations since the onset of the Covid crisis.  

“We see that 2021 will be a very challenging year for commercial aviation,” said Neto. “We are preparing for that scenario, but we see an opportunity to grow from 2022 onwards.”

Neto explained that the company continues to adjust its cost structure to deliver “a much better [financial] performance in 2021.”

So far this year the company has lost $728.6 million, including $121.2 million in the third quarter. However, Embraer called its liquidity position “solid” as the company finished the quarter with total cash of $2.2 billion, compared with $2.0 billion at the end of the second quarter despite a third-quarter negative free cash flow of $566.5 million. 

Although company CFO Antonio Garcia said he could not offer guidance for deliveries next year, he noted the fact that the seven airplanes it shipped in the third quarter, including five E175s for United Airlines, signaled a significant acceleration from the previous two quarters, when the company delivered a total of nine. He also said the company has delivered more airplanes in October than it shipped during the entire third quarter.

Embraer has formulated a new five-year plan to run through 2025 consisting of 18 projects aimed at efficiency gains, increased sales, and a combination of business diversification projects, innovation, and strategic partnerships.

Diversification projects most notably include a program dedicated to a new regional turboprop whose early schedules call for market introduction in 2027. Embraer has previously spoken openly about its plans to introduce a new turboprop to its airliner family, but former commercial aviation division head John Slattery, who earlier this year took over the leadership of GE Aviation, insisted the program would only go ahead as part of its planned merger with Boeing. That deal fell apart contentiously in April.

In a podcast interview last week with Air Finance Journal, Embraer Commercial Aviation marketing vice president Rodrigo Silva e Souza said work on the new program would accelerate next year and that Embraer already has entered serious discussions with a number of undisclosed business partners, who he implied would take a risk-sharing role in the venture.