Q2 2021 Embraer SA Earnings Call & ESG Flight Plan Event
Conference over to Francisco Gummies net please go ahead Francisco.
[music]. Thank you Philippe.
Good morning to all and thank you for joining our call today.
I hope that all of you are well and safe and thank you for your interest in our company.
As you will see in Anthony's presentation, our results for the quarter were stronger.
The Q2 results.
A clear example that our strategic planning has been well executed with the right focus and discipline.
Showing significant improvement in our financial performance.
Before we go into more details regarding the Q2 results.
Like to highlight the good momentum we are going in the different business segments.
In commercial aviation, we announced it a new firm order for third.
At 195 E Jets from the Canadian Porter Airlines.
With the purchase rights for 50 more aircrafts.
We also announced that new firm orders for 34 E 175 jets to horizon Air and Skywest to be operated for Alaska Airlines and Delta Airlines.
These new orders and order activity campaigns reiterate the continuous interest in the E Jets family as the best option is the regional aviation market.
And as active aviation, we keep up the momentum with the record sales in the quarter.
We maintain at our price discipline strategy.
Had a strong backlog growth with book to Bill in excess of 221 for this business.
In defense and security, we delivered seven Super Tucano aircraft in the first half of the year.
Also we had stronger performance in our cyber security and systems integration companies.
With double digit revenue growth in the first half of this year compared to the first half.
Last year.
Further in the second quarter, the KC 390, millennium Richards and important milestone by successfully performing on paper the runaway tests.
Although we are currently in negotiations with the Brazilian Air Force on the KC 390 million contract. We are continuing to be focused on the new export sales campaigns for this aircraft as well as the Super Tucano.
His services and support we are pleased with this strong second quarter results with better revenues and higher margins as traffic recovery and a strong demand for this activity drove 55% revenue growth in the second quarter.
Uh huh.
It is exciting to see the continuing positive sales activity in services with zero sign it with several important customers across all markets and at augment.
Driving backlog backlog expansion for this segment during the period.
This was further highlighted by the contract we signed it with Porter Airlines for a 20 year total support program.
With respect to innovation, we continue to make progress on partnerships in the European and mobility ecosystem through our subsidiary is.
In a segment with a strong growth potential in the years to come.
In addition, our services collaborative partner for them, because signing agreements with key customers such as Republic for its maintenance applications.
Finally on the operations front, we continue to see great improvements, we expect a 16% increase in inventory turns compared to 2020.
And a 20% reduction in production cycle time of our aircraft this year.
Positively impacting working capital and production cost.
I will now hand, it over to Antonio Garcia, our CFO to give further details on the financial results and I will return it and thank you.
Okay.
Yeah.
Thank you Francisco.
And good morning, everyone.
I always start with our backlog for the quarter.
On slide seven the graph shows we ended the second quarter at 59 billion.
Up 1.7 billion or 12% from the prior quarter.
This represents a return to the same $15.9 billion, we were at in the 'twenty to 'twenty before the pandemic began.
In our commercial aviation business, we close 48 aircraft sales in the quarter is spread across several different airlines.
In executive Aviation, we had a record second quarter sales a solid backlog as demand for light.
And larger business Jets Kochi neutral growth.
Backlog in services support and defense of Securities also grew from the prior quarter's level.
In summary, it was the best sales quieter fees immediately 2019.
These give us confidence in our plans for future revenue growth and improvements.
Moving to slide eight.
You can see the continuous improvement in aircraft deliveries compare.
Last year in both commercial aviation executive aviation.
Commercial aviation, we delivered 14 aircrafts in the quarter.
This represents a 56% increase compared to the prior quarter and 250% increase compared to the second quarter 2020.
Year to date deliveries, we were at 23, almost two and a half times higher than the same period in the prior year.
Of these 23 delivers 14, where it shows compared to four it shows in the same period last year.
Say it continues to perform very well for <unk> as the most efficient rightsize a single aisle aircrafts for the words post pandemic.
In the executive Aviation, we delivered 12 Jets light Jets and later larger jets for a total of 20 aircrafts in the second quarter.
This represents 54% increase compared to both first quarter 2021, and the second required of the prior year.
Year to date de lever it.
As active aviation delivered 33 aircraft, a 50% increase compared to the first half of 2020.
As noted is the guideline.
<unk> 2021, and we've published this morning, we expect deliveries of commercial jets to reach between 45 to 50, 50 aircrafts and the ZIP javad gets to reach between 90 to 95 aircrafts.
What the slide 19, we show Embraer NASA revenue.
Hey, Brad I had a solid having a growth in the quieter as all four business units. The rebrand is stronger from the pandemic.
Our top line more than doubled compared to the second quarter of last year.
Growth came primarily from higher deliveries in commercial aviation.
Though all our segments show at much improved growth during the quarter.
Year to date and narrowed our net revenue was just under 2 billion.
$767 million or 65% increase over 2020.
The revenue breakdown by business show Embraer diversification.
With commercial aviation represented 34% of the total revenues surfaces supports a 28 executive aviation to Institute and defense, 16%.
It's important to highlight the stronger recovery in commercial aviation.
This business was severely impacted by the pandemic of last year.
Slide 10.
SG&A expenses reduction continues to trend very favorably over the last six quarters.
We remain highly focused on SG&A efficiencies that are being implemented since the company's HAE stricter than last year.
Although the second acquired had they've light increase in G&A. This was primarily driven by increase in provision for Cherry Empire Pharmacy based incentives program do it you better.
I expect that the results for the company 2021 as compared to 2020.
Combined with the consolidation of expenses from Tempus, our new Cyber security company acquired in days of 2020.
Selling expenses remain at historical low levels compare.
Compared to the prior quarter selling expenses increased 4%, while net revenue increased over 40% sequentially.
As a percentage of net revenue Salix basis was four 2% in the second quarter compared to five 7% in the first quarter.
We achieved these results by leveraging our sales activity as volume increase combined with some more.
Cost efficiency.
Digital sales effort.
Is like.
11 shows our adjusted EBITDA and adjusted.
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We are very encouraged by the strong margin performance across all business segments in the second quarter.
Our adjusted EBITDA margin was nine 3% up.
13 percentage points over the first quarter.
Our adjusted EBITDA margin was in double digits at 14%.
Or up over 16 percentage points from the first quarter.
Both of these profitability metrics have recovered to the levels not seen before 2020.
For the fiscal first half of 2021, our adjusted EBITDA margin was three 9% and our adjusted EBITDA margin was nine 2%, both well above prior year's level.
This improvement comes from several factors, including higher deliveries.
At the higher the revenue better gross margin on improving pricing.
Mix production efficiency.
Fixed cost leverage on higher volumes and favorable tax obligation.
So off this quarter of approximately $25 million.
All of our segments have much better performance in the second quarter.
Adjusted EBITDA margin by segment in the second quarter were as follows.
Commercial aviation.
Was at one 7% negative, which although negative shows a great improvement from last year.
Executive Aviation was a positive 8% with a strong price discipline and consistent profitability.
Defense and security was a positive 25% led by Super Tucano deliveries, along with positive adjustments on certain defense contracts.
And service and support was at 19%.
As the strong contribution from spare parts programs.
Slide 12.
Shows our adjusted net income it was positive.
$45 million or 24 cents per <unk> in the second quarter.
This represents the first net profit on a quarterly basis since 2018.
The recovering adjusted net income is primarily driven by improved operating margins.
Reductions in financial leverage also contributes to improved profitability and.
Any future debt reduction would naturally have any additional positive impact on earnings.
Moving to slide 13, I'd like to begin with free cash flow.
Free cash flow.
In the second quarter was positive 45 million.
272 million higher than first quarter, and 517 million higher than the same period of last year.
This is a remarkable achievement.
Although year to date, the cash flow is negative $181 million. This is compared with a free cash flow burn of around.
Opinion after the first half of 2020.
We expect positive free cash flow for the second half of the year.
Two of the 2021 S indicating this.
This morning guidance.
Now to investments.
Our total investment were $50 million in the second quarter and 89 million.
Year to date, both of which are in line with last year levels.
This is important because it shows we continue to invest our future.
We have been very judicious in balancing the need to invest or a future where they needed to preserve cash.
It's slide 14 shows our our cash and liquidity position. We ended the quarter with two point 49 billion cash and cash equivalents I slight increase from the end of the first quarter.
Our debt balance was at $4.3 billion, a slight decrease from three months ago.
Our average debt maturity remains at four years.
We expect to continue to generate cash in the second half of 2021.
And beyond so our leverage will naturally decrease.
This will correspondingly.
Reduce our net interest and expenses and have an additional positive impact on net income.
Finally.
Moving to slide 16.
Abraham has published 2021 financial delivers guidance for the first time since the start of the pandemic.
Despite.
Risks of the economy economy recovery vaccination rates around the world.
And with a solid first half.
And good visibility for the remainder of the year, we decided to share.
The marked our targets for 2021.
We expect to deliver between 54 to 50.
Commercial Jets just to correct 44, 45 to 50 commercial aircrafts in 2021 and Nike Tonight.
Five executive Jets in the year.
We have a good confidence in those figures.
Our skyline are at fill it.
For both segments.
Combined with the growth in defense of Securities and continued their recovery in the service and support Swift recovery globally, we expect consolidated revenues to be between four to four and a half billion dollars easier.
[noise] represent a low double digit which grow at the mid point compared to the last year.
Adjusted EBIT margin should be in the ranch of 3% to 4% and adjusted EBITDA for 2021 should be between eight five to nine 5%.
Hey, Brad has had in the first half of 2020 margin at these rates as we expect these good margins to repeat in the second half of the year.
It is important to mention that those markets includes.
Cost related to the Haynesville girish of commercial aviation as well as expenses related to the arbitration process.
Finally, our free cash flow guidance is for is a range from.
Free cash flow usage of $150 million to a breakeven for 2021.
We had heard that the $81 million of free cash flow usage in the first half of the year.
So you anticipate the embraer to generate up to 180 million cash in the second half of 2021 without any cash inflows for M&A, perhaps.
With that I conclude my presentation and hand, it back over to Francisco for his final remarks, Thank you very much.
Okay.
Thanks Antonio.
The second quarter results and the guidance for the year reinforce our confidence in our strategy.
And this confidence motivates us to accelerate the performance improvements and the delivery of our long term strategic plan.
With focus and discipline.
As I have mentioned in the past this year is one of recovery.
And next year and beyond we plan to capture embrace full potential to grow with profitability.
Looking ahead, we foresee in the medium term the potential to double the size of the company.
And that doesn't include new strategic projects.
We are going to be bigger and stronger.
Focusing not only on the top line, but also much higher profitability.
We are already showing some positive results of their hard work, our United and motivated teams of employees have done over the past several months.
We are expecting for a positive operating profit this year and much better free cash flow performance.
With a clear potential to breakeven for the year.
This will be supplemented by partnerships and new programs to drive even higher growth opportunities.
We are also advancing on our ESG journey.
And right after the Q&A session, we will share with you our renew ESG commitments.
I invite ever one therefore to remain online for this yes, you events.
Richard We will start just after their results Q&A.
Also we are looking forward to a new chapter offer embraer with our extraordinary shareholder meeting scheduled for next Monday.
We expect our shareholders to approve the election of two international Board members.
With extensive global aerospace industry experience.
Following constructive feedback from analysts and shareholders to improve our corporate governance.
This candidates have deep technical knowledge strategic profiles and an innovative fast process.
Finally are you closer today by thanking everyone for the strong quarter.
It always starts with our people and their focus and passion on executing our strategic planning.
As I mentioned to you in the last earnings call. We are a different company today.
We are in a process of transformation and we are moving fast.
Thank you for your interest and confidence in our company.
Over to you Philip.
Thank you very much Francisco and before we continue we'd like to show you a video check this out.
The world is a different place to a year ago industry to change aviation, perhaps more than any other embraer has changed too.
When leaner more agile and fit for growth.
We're already on a path that will make us bigger and stronger and with an all new product portfolio that are the most efficient and technologically advanced in their class all built with a passion to improve sustainability economic cost efficiency and driving new innovation.
We're better adapting to the challenges and opportunities of now.
Like our customers we're always looking.
Beyond what was previously thought possible.
Why the world looks to Embraer, we are right for the World ahead.
Right now.
And brands.
Challenge creates outperform.
And now let's move onto our questions and answer session. We are preparing the sat here and remembered that questions can only be sent to the writers platform Eduardo quota will be our moderator and he already has some questions with him Eduardo over to you.
Right.
Thanks Sandeep.
Renee.
So let me see the questions that we have.
Our first question. We have is can you give an update on this back negotiations with ease.
Francisco Antonio wants to take that.
Thanks for the question I mean at this point of time, we can say that the negotiation has moved them.
Well I would say yes.
Domestic with this process.
Okay.
Moving onto questions SEC compression we have.
What or what work has embraer be doing to develop electric aircraft and making this product more viable for customers.
Thank you Oscar good question, well, we have our first technical flight recently with the Ipanema full electric.
We hope to present these aircrafts through the through the public soon.
And they're continuing to invest in.
This electrification viewed as one of the one off the innovations interventional fronts that we have I mean to be in line with your ESG activities that we are moving fast.
In Embraer.
Great.
Uh huh.
Third question, we have from investors is from a deep remissions xactly from Bradesco. He said defense showed a material gross margin expansion in the second quarter can you give any more details about that.
Vitor. Thank for the question, we had in the second quarter two main effects.
On the defense side first one was the Super it's going to deliver that we were not able to deliver in Q1 that flows to the Q2 figures.
In addition to it we have the adjustments as a defense contract we have in the local currency in Brazil, I would say both effects higher deliveries and Super Tucano and the adjustment in the contracts leaders to this 25% margin in Q2.
Okay.
Good.
The next question comes from UBS.
Could you comment on the 25 million reversal mentioned in the press release also what was the positive cost base revision related.
The.
Related on the results.
So thanks for the question first point, we built up a provision in 2018 for the Brazilian gave here visited us in the fall and that we have a claim discuss being discussed since 2018.
And we were able to gain this disclaim any.
The second quarter, that's why we reversed the tax position that was also read adjusted in 2018. That's why we also consider in our results.
And the second question was in regards to the contracts, we have an adjustment here around $10 million in the second word that we're both effects.
It is important to all situations that even that you have this tax reversal.
5 million, let's put first quarter to the second quarter.
Do have the other types of costs that we are not adjusting that's also not let's see for example, reintegration of commercial aviation and arbitration cost, which is more or less net displayed 5 million I would say the numbers. We are seeing right now, let's see who buys a Q1 and Q2 is really.
For me describe.
The real performance of the company.
Okay.
We have several questions about our bodies and I'll try to summarize them. So basically any general updates on your E. Vitol initiatives would be very helpful, particularly on negotiations with them.
We already talked a little bit, but maybe an update of the vitol.
For instance, green Yeah, well, we as I said, we are very excited with this.
This initiative with this product.
We.
We had the first flights with the prototype.
Oh, one to three a successful fast by the way now we are preparing the next the next path with a prototype for a scale one to one.
Technically it's moving very well we are we are planning the certification by 2025 and entering service in 2026 and about the negotiation reside I mentioned already that's moving very well.
Okay very good now moving to business Jets, we have a question from credit Suisse.
Business jet has been very strong.
And on the first quarter results you mentioned half of the deliveries were for first time buyers in the second quarter. How much were first time buyers, maybe we can give an overview of the business jet market and they can do it and you can see.
Uh huh.
Today in our backlog the portion of our first time buyers I would see is a third.
Something like 30%.
Our backlog of deliveries for the whole year, we are talking about 30% first time buyers.
And we agree with the market if you see the industry.
Book to Bill between one to 5221, a one to five in Q1 and Q2.
Once you too and we are I would say a little bit above that.
It's doing pretty well, but for sure the press buys.
She also the market, especially in the light jets.
Agree.
Now there is a question on commercial from credit Suisse.
Your guidance for commercial deliveries of 45 to 50 seems low given your you have already delivered 23 jets are are there any supply chain issues that could prevent you from being above that range also they're asking.
What do you see in terms of delivers for 'twenty 'twenty two any any color on that.
Let's take into account that commercial vehicle is still suffering from the pandemic.
What we are.
Given the guidance to deliver this year is a little bit higher to last year, unless you deliver 44 and for sure we are selling more but its going to impact more 2022, and the fact that we will deliver added 23 aircrafts, because it's well divide it.
Throughout the year.
That's why the 47.
Uh huh.
I would say between 50 or 40.
45 to 50 is the number that we are having and we do see I would say around.
30% for next year between 65 to 70 aircraft, but has to be confirmed but it's more or less the number you see it's important information, we do see commercial aviation coming back to.
To historical levels of Teva.
For 2383 awards, we are selling more but the sales country. We are closing right now is going to fulfill this guidelines started 2022 and two.
<unk> thousand 20 ones more or less the same level from Duane <unk>.
And I'd like to make a link between this answer and the result of the company. It is true that in this first half of the year comparing to the first half of last year, we did much better in terms of deliveries and in terms of results the numbers speak by themselves, but if you look at the.
The guy the guidance for that for the entire year, you see that no as planet, we won't see a huge increase in volumes in the commercial or or executive. Yes. We are seeing some some growth modest growth this year compared to the last year, but the improvement in their results I mean, either.
Sure.
The EBIT coming from almost a -3% last year to something between three and 4% of this year or the free cash flow for -900 million last year to something between -115 zero. This year all of this good performance is.
It came from efficiency gains fuel efficiency gains, we really did a good right sizing the organization, we are improving our I mean.
A lot of activities on cost reduction on inventory reduction.
In all the company you know I mean, pushing the sales for the future. So again I mean for next year on I mean, we expect that with the with the with a stronger growth in the volumes in all the business units and read this more efficient and agile company. None of you see a much better performance.
That's why our result is coming from this year from efficiency gains from some additional sales of course, but mainly from efficiency gains just to completely the question fruit supply chain issue what.
What we are within the guidance, what we agreed with our customer for easier at least for the commercial the issue having not seen any supplier chain I would say problems this year.
We have several other question. So the next one is related to margins and free cash flow. So the question is how do we see margins per business in the long term and are and what sort of free cash flow conversion of EBITDA into free cash flow conversion.
Embraer expect.
So I know he goes to margin we do see.
Let's in a long term perspective, we do see services support the double digit as it is today.
We do see executive and defense singles.
Zynga higher dish.
We are more or less also today and we do see the commercial aviation.
I would say mid single digits.
Gross between 3% to 5% in the long term that's what we see is regards to profitability for the company.
And regards to the cash the conversion from EBITDA to.
EBT I would prefer to talk we are seeing today are 50% conversion for me a bit.
Cash flow, we still needed to improve something but it's more or less the metric is unused internally, we do see today in the longer run 50% of their Vit being.
Being converted into cash for.
For the years to come.
So the next question is from J P. Morgan Marcello Motta any update on the sales campaigns for commercial aviation could we see more orders during the second quarter.
Yeah. Good question, Yes, we have a lot of our activity sales campaigns ongoing our commercial aviation.
We just announced that their sales for Skywest with 60, aircrafts and yes, where we have more to come.
By the way this guy with it's not.
Part of the backlog in Q2 now we agree.
You book, the 70 aircrafts in Q3.
Parenting aircrafts correct aircraft correct. Thank you Anthony.
There's a question here from Lukas <unk> from Santander.
Talking about you know inflation can you. Please comment on how the company see the raw material inflation and how is the company offsetting these impacts.
Let's see.
We do see in our final projects inflation I would say all index who have.
With our suppliers between 2% to 3% for next year and two to the customer side. We have the also the the real adjustment clause with the index I would say.
Our.
Takeaway for next year is that balance between what you have internally inflation and the pass through to the customer base, that's more or less what you are seeing but there is a sudden indicators a spa.
Like in deflation index for next year that we were going to discuss each of our customer base. Moreover, we do have we did this year and we are doing this year and with that we do have also a lot of design to well activity side they were to reduce the base.
The costs, we have today without any impact from inflation or indicators.
Very good so now moving to new projects. There is a question from Hugh Veggie Vish Tomatoes, any update on the partnerships for the turboprop aircraft.
Oh, it's a good question well this Friday yourselves are moving very well, especially with our with the malls.
The recent interest of U S Airlines and that product, so we see that product as a.
It's a good alternative for for that market and other markets as well and also as a preparation for four new technology in the future.
We are very optimistic and working hard to accelerate this partnership front.
Okay.
I think we have at least one final question, it's back to commercial aviation what do you expect its from a W. T. S. What do you expect in the mid to long term in commercial aviation as we have seen recovering demand for flights and also renewal for having more sustainable fleet.
Yeah.
Thank you so again we have.
No I mean globally now.
94% of the Embraer fleet back in the Sky in the U S Army.
97% of the Embraer fleet is flying again, so it shows that the recovery in the domestic market really is coming and that's why we are working in very very saves a lot of sales campaigns that segments for you want and E twos as well.
So we are working hard to take advantage of this moment as Antonio mentioned that we see volumes growing I mean 2020, but strongly from 2000.2022, but strongly from 2023 onwards.
I think a final question it's related to defense can you. Please comment on the expectations for new KC 390 orders.
Oh, it's a as I said in the opening we are working in the many many sales campaign for four important sales campaigns for the KC three nights and also I mean, we are working in the developed partnerships that will help us to open new markets for that great.
The aircrafts.
I think that that's what we had on the Q&A.
Hum.
So I think that concludes the Q&A.
I want to thank you all for the questions and the time so now.
But.
Antonio Francisco Muslims.
In Q1.
Thanks, a lot. Thanks, a lot so thanks for your interest and.
Support in our company, we are leaving a really a special moment as I said before this year is the year of a recovery a year of turnaround and a framework here in the numbers as I said before I speak by themselves we expect to have.
A much better year in.
In 2021 compared to the to the last year coming from a very tough prices as you know and we hope to we expect to capture the new embraer potential for them to grow from 'twenty to 'twenty. Two onwards. So thank you very much for your support.
Thank you.
This concludes today's Q&A session that in turn concludes <unk> second quarter 2021 financial results presentation. Thank you very much for your participation now we'll be taking a quick break and we will soon be back to start the ESG flight planning events and prayers journey for a sustainable future.
Stay with us.
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[music].
Hello, ESG flight plan Embraer journey for a sustainable future begins now first of all I would like to give a warm welcome to everyone joining us today.
Today, we are E. S. G. Three letters that say, so much environmental social and governance criteria, that's had a new way of acting in a fast changing world.
But more than words, they represent a commitment we make today for the future ahead there.
They also sum up so well embraer new moments when actions are being taken towards carbon emission.
Reduction in a more sustainable diverse equal and profitable company I'm, Philip we call Sada and some of them brass main leaders, who will be joining us today to share with you what is already being done what is about to come and how it is presented here can contribute to our planet needs right now and just as a team.
Among so many interesting and important news, we'll see firsthand the flight of our new technology developed by Embraer, which represents the first step towards the development of zero carbon emission aircraft. So stay with US most panels will be followed by testimonials from partners and institutions that already see.
The change and understand the importance of Embraer skulls and achievement.
And we would love to hear from you. So please send us your comments your questions at any time during our transmission using the chat box and now to kick off today's program. We begin would've film made especially for this event and right. After the video comes our first Speaker Francisco Gummies net.
<unk> and CEO of Embraer to reaffirm the importance of impress commitment with a more sustainable and responsible future.
My name is certainly data and I'm 100 million in golf ball I can imagine.
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Right now, they're all just facing massive challenges are fattening proportion, where all passenger on this beautiful sunny, but if we continue our parallel it won't take us too far.
I know, that's a bit of sustainable fearful of having one of our guidance.
You have our design the most efficient and environmentally friendly aircraft the Orleans, Memphis, and new propulsion technology, and you are moving fast to create a new air transport modality with lower emissions.
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[music] when you look at the Embraer.
Thank you all for joining us today.
We are excited to announce our ESG goals and outline our plans going forward.
This is an essential part of doing business today.
Our executive team and all our more than 18000 employees, who are committed to driving real change at the company.
Climate change is one of the greatest challenges of overtime.
This week, United Nations partnership a new in alarming scientific reports reinforcing the impact of climate change on the future of our planet and their origins of governments companies and always taken hold.
As to act now.
As transport is a vital feature of our modern globalized, the words connecting people and businesses across oceans and continents.
The benefits of air travel are clear, but this connectivity creates an environmental challenge.
I think Brad you recognize the urgency of the climate change.
The role of the industry to tackle the challenge.
We all need to make a significant if fourth to reduce emissions and aviation industry must take a leadership award.
In that spirit.
We are doing our part to act now and commit to move in the aviation sector forwards heading towards a low carbon economy, and a more diverse inclusive and ethical society.
As part of this commitment to building a sustainable future Embraer set ambitious new ESG goals.
We will further reducing emissions related to our operations and develop more sustainable products with less environmental impact and our Valerie chain.
And ESG is at the heart of aim brass purpose. It is increasing part of our values and that's why we have included ESG as one of the pillars of our strategic plan.
Lining business strategy with social responsibility and environmental practices.
Acknowledging this is our main challenging for the whole society. We recently join at the target through Zero initiative largely by the World Economic Forum as part of the commitment to achieve zero emission aviation growth through Youll propel.
Ocean systems and fuel technologists.
It is just an example of a mood this sector initiatives.
Others with we expect it to make the difference and contribute to a net zero aviation.
I'm very pleased to have other representatives from the name of our leadership team with me to outline more of our commitments and the pathway from now on thank.
Thank you very much.
And over to you Philippines.
Thank you Francisco.
Yeah.
The World is calling us to act right now to move forward in the right direction and I also present Embraer ESG flight plan, we invite to the stage Qaboos Greener, Vice President of people ESG and communications of Embraer Welcome Greener.
[music].
Thank you Philippe and I am pleased to share with you.
Our goals and commitments.
As part of a transition for a low carbon emission economy, and a more ethical and inclusive society.
Starting with environments. Our aim is to decarbonize, our direct and indirect operations by focusing mainly on carbon reduction and efficiency.
Our inventory shows that 75%.
Of in branch footprint in scope, one and two which includes our operations in energy consumption.
So shaded with the jet fuel and use our advantaged.
That's why we are prioritizing our efforts in these matters.
Aligned with Paris agreement goal to limit global warming to one five degrees Celsius, we are committing to.
Carbon neutral operations by 2040.
50% reduction in net carbon emission by 2040 from a 2018 baseline.
Begin using sustainable aviation fuel SaaS by 2021 and aim for at least 25% by 'twenty 40.
100% of energy from renewable sources by planetary and step goal of 50% renewable energy by 2025.
Offsetting any residual emission that will not be with us through efficiency projects available alternative energy or advanced in technology.
Carbon neutral growth from 'twenty to 'twenty two.
Commits to capping carbon emissions to 2021 levels, while growing operations.
Regarding scope three.
Net zero aviation by 'twenty stage, two will be achieved with our contribution in developing products services and new technologies, such as electrification hybrids M B a fields, including SaaS.
Working together with suppliers to make our current tech crafts compatible with the use of 100% SaaS.
Actively working with the supply chain to expand the global SaaS production scale.
Continuously improving the efficiency of our core into crafts until the certification of new technologists.
Allowance of zero emission Ito aircraft by 'twenty 'twenty six.
Regarding the social pillar, our commitments are concentrated in two areas education and diversity.
Our objectives are foster a workplace that is 100% inclusive and safe for all.
Increased diversity and representation in hiring retaining and promoting talent across all levels of our organization.
Keep leveraging education as a competitive advantage create access in local communities.
Two key social programming and educational initiatives that impact society, while attracting local talent.
And the targets includes.
100% of leadership positions continuously train on diversity and inclusion by 2021 and all employees by 2022.
50% diverse hires in all new entry level employees programs by 2025.
25 per stance of women in the company Master of Science in Aeronautical Engineering program by 2025.
20% of women in senior leadership position by 2025.
Bring more than 80% of the student from Embraer high schools to public universities are scholarships.
Launched a new program focused on qualifying.
1500 people from under represented groups in technology call it social Tac by 2025.
Having a workforce and culture is predicated on good governance.
Regarding governance Embraer is already recognized for practicing the highest global standards of governance and for this very reason, we know that it is necessary to pursue continuous improvement in this area we are committing to.
Robust ethics and compliance program fully align with global standards maintain highest international standard of governance.
And maintain their high safety standard of our products and full alignment with international requirements.
We are aware of the challenges and weak.
Committed sweat advancing the environmental and social agenda, promoting a more ethical and ferrous society.
DSI demands of our stake holders and core elements of our purples. Thank you very much.
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Texas broke the view that sustainable finance will fail and its mission. If it continues to leave high emitting sectors on the sidelines.
Clearly aviation is one of those high emitting hard to abate sectors.
As of today, the aviation industry is not on track to meet the goals of the Paris agreement the pathway to net zero is unclear and significant investment in R&D is required.
Such a significant transformation will require collaboration from all parts of the value chain.
Operators original equipment manufacturers, such as in brass parts manufacturers sustainable aviation fuel supplies researches and more including finance.
OEM, such as and Brad have a critical role to play if the aviation industry is going to be able to find a path to material decarbonization and net Sara.
And brass commitment to change how the industry works through innovative engineering energy efficiency and focusing on multiple alternative energy technologies, whether it's energy efficiency.
<unk> hybrid electrification and green hydrogen.
Keys to unlocking a pathway to a sustainable future.
And <unk> recent announcement is an important step in the right direction and we look forward to accompanying them on this journey.
In a world of more connected than ever clients can access the history of our company the prediction methods their supply chain diversity any quality concerns to meet the expectations of these new.
World, having a strong and yet sensible governance is essential.
To talk about that and on how embarrassed high governance standards I T to support the sustainable growth that the business. We invited stage February analyst Senior Executive Vice President General Counsel, and Chief compliance officer of Embraer Fabiano taken away.
[music].
Thank you Katy I'm excited to be here today to discuss governance and outline our goals.
Everything about governance starts with a strong board.
Our board is very well engaged and has strong yes, she experience to support us in fulfilling our goals and initiatives and guidance through this journey.
<unk> is a public company, which has placed us in Sao Paolo on the new market, which has the highest level of corporate governance in Brazil and in New York on the New York Stock Exchange, we need the Brazilian highest and you ask an international governance standards.
The board has an ESG committee that works across all of our key stakeholder audiences to develop such strategies defined key performance indicators and established targets that are integrated into our corporate sustainability plan.
And boy, our ethics and compliance program is supervised by the board of directors and its audit risk and ethics committee, ensuring the department's independence.
Reporting directly to the board's audit risk and that is committee the chief compliance officer, Tcl is responsible for developing policies procedures and controls and guidance compliance culture at all levels of the organization.
<unk> seeks to ensure the highest level of corporate integrity and ethics in its activities.
We have the highest ethical standards and zero tolerance policy for violations.
We have established a robust and comprehensive compliance program to design guide promote and support our policies procedures and activities necessary to ensure the company and its the highest ethical standards.
We also promote a culture of ethics and integrity.
He is on our core values and our code of ethics and conduct.
We support the businesses in risk management, and Densification of Red flags process improvements and incident investigation.
We also consolidate all of our compliance initiatives, including anti corruption export control and our helpline channel.
First of all the channel, which also available 24 by seven and guaranteed anonymity in 100% of our reports.
We also take a very strong influence how hard to another top compliance is a topic on top of leadership's agenda as they believe that the example comes from the leadership.
The subject is on the monthly agenda of board and management meetings with studies of cases for training purposes.
We also implemented a possibility. So we just see the ships fiber compensation in up to 20% if they did not meet targets to promote and deploy compliance within their respective organizations.
Regarding flight safety, we have a policy that permeates the entire company and incentivize our continuous and rigorous commitment on the part of employees and leaders to building ever safer aircrafts that exceed national and international certification standards.
The company flight safety policy takes a proactive approach to the entire product lifecycle to ensure safety norms are met and exceeded the statutory minimum.
And that is greener mentioned, our employees customers partners investors and all of our key stakeholders want to know that they are working with them ethical company.
Thank you and let's see another testimonial from one of our customers.
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While the Ashish are incredibly important for every industry, but I would say even more so for the F. He Asian industry. It called insurance about targets from a field of environment, social and governance.
The Asian industry by nature is bringing a lot of economic value and economic prosperity to society, but we cannot just look at the economic value. We should have a more holistic view and its total view I think as an aviation industry, you've done already a lot any field of environment and we should continue to do so but by now fully embracing the ESG each.
We not only focusing on the economic value, but also environmental issues, social and governance issue. Therefore incredibly important while I do applaud initiative, which embraer has taken already and basically is reconfirming and stepping up the efforts on this field of ESG as I mentioned, he ashish are incredibly important.
For the aviation industry as a whole and therefore embraer is such an important and relevant player in the industry is taking a leading role in that and that is very important for all of US KLM is a happy customer of Embraer and therefore, we do applaud the initiatives and the actions taken by Embraer and we see basically back in the aircraft.
We do operate.
We began with the last ladder of ESG G for governance, but everything today is about moving forward right. After all what's the point in developing high end technologies find cars and some of the most advanced.
Aircraft ever seen if all this knowledge and accomplishment cannot be shared with the society around us. So now we get to the letter S. Social and Embraer has a big legacy when it comes to that the company has a long history of successful initiatives in the social area. Our history. There is about to be expanded.
Now Carlos screen, it is back and he'll tell us how the company is paving a solid path towards social transformation greener.
Thanks again Felipe.
Our social approach is closely linked to the creation of Embraer itself. When the vision was before manufacturing aircraft, we would need to produce greater on article engineers.
We maintained their early days periods and have developed an ecosystem that generates and disseminate knowledge promote scientific developments and impact society in a very positive way.
One Great example of this is the Master and article Engineering created created 20 years ago in partnership with technological Institute of Aeronautics the backbone of our talent development and engineering.
The program attracts engineers from all over the country in Brazil for more than 100 universities using learning by doing methodology will.
Altogether more than 1600 engineers that have graduated contributing to promote a virtual cycle in the regional economy.
Another long term and successful program is the Embraer institutes established in 2001 focus on high quality education for low income high school students.
This initiative already impacted more than 4000 students. The high schools are focus on equipping students with technical social environmental and Intrapreneur ships skills.
In the U S. The Embraer Foundation offers community engagements, such as volunteering and grants program as well as educational project, an opportunity that aim to enhance social and environmental development along on this among the under service to students.
Another social projects focus on professional qualification for low income young people call. It formatting and Gs engaging brea volunteers to make the factory and environment for learning and developing working skills and citizenship.
Yeah.
Regarding diversity Embraer I believe in the importance of a diverse and inclusive environment that respect the uniqueness of all people.
We encourage the creation of affinity groups to discuss the various themes of diversity in the company encouraging these organic movement by the employees themselves to create a more inclusive environments.
Created organically the largest affinity group in the company is call it in Grace, which the main purpose of.
This is to discuss and drive actions for our diversity and inclusion this initiatives.
Helped embraer well coming groups focus on women.
Ethnic.
LGBTQ I E plus and people with disabilities.
Almost 1000 employees currently participate in embrace.
Therefore, fostering a comprehensive social approach, which connected location diversity and inclusion we strive for a building a more sustainable innovative and inclusive company and society.
<unk> you very much and let's watch now the testimonial from another important embraer partner.
The future of business aviation depends on us being constantly evermore safe secure and sustainable and in all three of those areas Embraer is an undisputed industry leader, we're looking forward.
To a future, where we can get people, where they need to be when they need to be there safely securely sustainably and we're grateful that embraer is helping lead the way.
So now our flight plan gets the last span of the day.
<unk> for environmental I, just wanted to remind you that you can send us your questions at any time during the event through the chat box.
And to present Embraer strategy on how to build a more sustainable future based on new technologies and new projects that will help lowering emissions and our footprint on Earth. Please give a warm welcome to Luis Carlos a force senior Vice President of Engineering technology and incorporate strategy offering.
Brad.
Thank you Felipe.
I would like to once again, thank you all for joining us today.
And remember that we are very excited to be part of the global efforts towards sustainability and.
And two health creates a zero carbon world.
Since it's early days aviation has been one of the most innovative industries.
Airplanes became 50% more fuel efficient in the last 50 years.
With the same proportion of emissions reduction.
In the long run.
Air travel has never been so popular.
Connecting people and promoting worldwide economic growth.
With the projected traffic grows though.
Even considering future efficiency gains like the ones you observed in the past decades Evs.
E V Asian emissions would at least double by 2015, if no further actions worthy.
This is not acceptable.
That is why as an industry.
We established ourselves aggressive C O two emissions reduction targets by 2050.
This will only be possible through a concerted efforts of several stakeholders.
Great deal of research and innovation in several fields.
As well as new public policies and regulations.
As I said, it's a temporary error.
We want to be part of these efforts and we are very excited about the new opportunities that will unfold in this future sustainable work.
For ethylene manufacturers like us most of the emissions are by far those of scope three.
The once generated by utilization of our customer's aircrafts.
And I will devote a good part of this presentation.
But before that let me start by talking about scope one.
The C O two generated by our own Edinburgh operations.
This is the size of our challenge.
60% more than 60% of our scope one emissions.
Associated with the consumption of jet fuel.
Links to flight tests production flights and furry flights.
And our plan is first increased the use of sustainable aviation fuel in our operations.
Optimize our ground and flight test profiles and efficiency.
And last benefits of the more sustainable future projects will be flying.
In this sense.
In the third quarter of this year.
We began using SaaS in Melbourne, Florida, the headquarters of Embraer Executive Jets.
We will increase the use of SaaS throughout next years.
<unk>.
We set a goal of using at least 25% of SAS in all our operations by trying to foresee.
They use a SaaS together with the use of renewable energy in our sites will be the main levers that will allow us to meet the goal of carbon neutral operations as we have announced today.
But let me now go back to scope three the.
Emissions.
Associated to the operation of the Emperor manufacturers aircrafts by our customers.
Today for the first time, we announced our vision and commitments.
Which is.
Develop new solutions to net zero carbon emissions in aviation by 2050.
We believe this is possible and we intend to focus in two fronts to make it happen.
First bringing best in class sustainable aircrafts, two markets at an accelerated pace to help change the efficiency and emissions profile of the existing fleets.
And seconds collaborating.
With all aviation industry stakeholders to develop and advocates for innovation and public policies towards a sustainable ecosystem.
Including availability of SaaS electrification hydrogen efficient operations among others.
I will walk you through some of these initiatives in the next slides.
Starting with airframe and engines.
In the efforts to reduce fuel consumption.
Over 50 years at Edinburgh, we have been developing tools and technologies that allow us to produce ever more efficient aircrafts and therefore generates less emissions.
We designed the second generation of our E Jets.
Offering a 25 reduction in fuel consumption and C O two emissions first seat miles.
And 30% reduction in.
In noise.
Thanks to new engines and airframe efficiency.
With new high aspect ratio wings. The E. Two is the most efficient and quietest narrow body currently in operation.
Gratefully contributing to sustainably.
Investments in efficiency by us and by our industry.
Partners and overall will be an important contributor to a sustainable future.
Let's move on to SAS SAS.
SaaS will play a key role in creation of a carbon neutral aviation industry.
And Brian has been working as you can see in the slides in the last 20 years on Biofuels is starting with the ethanol powered ipanema certified in 2004.
As well as several experiments with sucks up to 50% splits.
In commercial and executive aviation, including regular commercial flights with passengers.
And we will continue to collaborate with SaaS suppliers.
Engine and system manufacturers.
Soph is dropping meaning that it is possible to use SaaS any existing gas turbine fleet without any hazard modifications the penetration can be much faster.
Then the introduction of new aircraft types. However, the current SaaS adoption is still very low.
Just one just zero point, 12% of all few used itself.
Limiting barriers are blends compatibility production at scale logistics and costs.
Public policies and regulations will be paramount to develop SaaS technologies and its supply chain Suez.
However, we will continuously collaborates with SaaS development and promote actions to significantly increase staff utilization.
Our aspiration is why 2030.
Is that by 2030, our aircrafts will be compatible with use of 100% stuff and we're working with other important stakeholders to make it viable.
Talking about infrastructure.
Important few savings opportunities come from optimized operations, such as direct routing continues to sense, ultimately altitude and speeds and infrastructure such as reduced taxi times.
According to the ITU improvements in air traffic management, and other operational procedures could reduce aviation fuel burn from 8% to 18%.
We collaborate in these efforts through our subsidiary APAC, which develops several cutting edge solutions for efficient efficient air traffic management.
Let's talk about hydrogen more recently hydrogen has emerged as a potential aviation fuel of the future with fuel cells.
<unk> direct co combustion options offering great potential.
Embrace currently studying technical economic and supply chain aspects of integrating hydrogen power plant systems into an airframe.
I would like also to announce that our roadmap considers the hydrogen powered test vehicle first flights by 2025.
And last but not least let's talk about electrification.
Electric propulsion is already a reality for aeronautical use which represents a big step forwards in the transition to a zero emissions aviation.
Surely for small and medium aircrafts.
Electrification also allows aircrafts to apply distributed propulsion.
Radically changing the airframe design and propulsion integration.
In recent years <unk> has invested in R&D of electric and hybrid electric propulsion systems and today, we would like to share it firsthand with this audience a significant milestone towards a carbon neutral future.
It is a pleasure to show you now the first flight of Empress Electric demonstrator, which performed which was their funds a few days ago.
Let's look at it.
Yes.
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First slice alloys and emotional moments in our industry.
This test beds will help develop knowledge about batteries electric markers thermal management and electric control systems high voltage handling safety of flight. This wasn't as you saw immense flights.
That will then be applied to our future projects.
So I hope I could give you an idea of some of the several technologies and paths being explored towards a sustainable aviation future.
There are many challenges ahead.
And to be successful equal inserted efforts will be required.
But I'm sure we will get there.
We believe the answer.
We will be a combination of these efforts and solutions.
Each one being optimized to certain applications missions aircraft size and range and as I said, we believe the sustainability imperatives.
Catz with emerging technologies as we've seen will create new opportunities.
Overtime.
The market has demanded ever bigger airplanes.
Seeking lower seat mile costs.
This is perfectly exemplified by the historic evolution of Andrea.
The portfolio in commercial aviation.
From the 90 seats Banzer anti in the early seventies to the 136 seats he too today.
This smaller aircrafts have disappeared slow.
The routes were concentrated.
The bigger cities.
Leaving many communities underserved.
But we believe.
This is about to change.
Many of the new technologies like electric and hybrid electric propulsion will first be available at the lower ends of the markets and new efficient and sustainable applications and markets will appear.
Urban Air Mobility is the perfect example.
The very low ends the all electric and carbon neutral.
In addressing an important pain points of several communities around the globe.
If we go up the ladder to slightly bigger.
Airplanes.
New solutions will allow the reappearance of commuter and regional flights.
Allowing airlines to stay cost competitive and profitable while meeting the sustainability challenges.
We believe are temporary and we are very well positioned for these opportunities since.
This is the market segments, we have been operating in the last 50 years.
For the bigger airplanes like the E jets and on SaaS and hydrogen will lightly.
Be the most efficient solutions.
So.
Let's have a look at a few ideas we are considering.
After the appearance of the regional Jets and turboprops have lost their appeal.
Passengers still see today.
They see them as cramps.
Not for assessing enough overhead bin space noise.
Noisy and old stack.
Our proposal here.
As you can see this beautiful.
Airplane is to offer a high tech 70 to 90 seats to Oprah.
With the same cross section of the Jets.
Very comfortable no middle seats and spacious overhead bins.
The rear fuselage mounted engines will provides a quiet cabin and allow jets bridge compatibility.
With these game changing characteristics. This era products will seems it seems like seamlessly replace the parents 50 seat regional jets in very important markets.
And all of this with the turbo prop fuel efficiency, which is around 20% better than that of jets.
And 20% less emissions for sure so even with the current propulsion technology. This innovative design will provide significant and sustained.
Technology. These innovative design will provide significant and sustainable gains.
And the rear mounted configuration is ideal to evolve with new greener technologies and propulsion solutions when they become available.
Later this year.
Our commercial aviation teams will provide further details about these very innovative concepts.
Let's now talk about the stouts.
Let's see our South project, yes.
This is the configuration, we are proposing to the Brazilian Air Force for a short takeoff utility transports.
Which is the acronym of stocks as.
As you can see this is a hybrid electric configuration, leveraging the distributed propulsion concepts enabled by electrification.
And providing increased safety.
Better performance and lower emissions. This platform is being defined for dual use so civilian applications are also being explored.
Let's now.
Talk about our projects.
This is our electric vertical takeoff and landing aircraft our EBITA.
With <unk>, we are re imagining the future of urban air mobility.
We really improve the lives of millions of people in congested areas around the globe with a.
100% electric and quiets solution.
It goes without saying this is a zero emissions solution.
This vehicle is beam designs, we distributed propulsion.
Fly by wire technology, very high safety standards and high utilization in mines.
In collaboration with our subsidiary APAC Eve will develop the air traffic control system dedicated to urban air mobility.
Elaborating too creates inefficient UE N ecosystem.
Once again.
Given our end to end proven track records in aviation. We believe we are very well positioned to be among the few that will succeed in this market.
In conclusion, I would like to say.
This.
Indeed, very exciting times and we are absolutely committed to play our part in the creation of a sustainable future.
Thank you once again to everyone, who joined US today and stay tuned as in the coming months, we will be presenting more news regarding low and zero.
Emission aircrafts, thank you very much.
Thank you Louise we got to the end of our event and now we will be having to our press conference, but before we do so I just wanted to take a brief moment to thank everyone, who took their time to send their testimonies stress. The reassure that are planned for the future that takes ESG seriously and with risk.
Possibility is the right plan I would like to thank our speakers for your presence and on behalf of Embraer I just I want to thank you all for joining US. It is time for a better future, let's build it together we've been taking a quick break only five minutes and will be back for our press conference.
Members of the press please stay tuned.
I encourage you all to answer a quick survey that will be on your screen during the break and don't forget to send your questions through the schatzel, we'd be right back.
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We are beginning our press conference and to answer the questions sent by you doing our program I have Embraer leadership team here with me.
You for being here.
And now our first question goes to glean there.
Can you describe embraer <unk> carbon emission profile, what our embraer as main sources of emissions.
Okay as Luis Carlos mentioned about almost 70%.
Of our carbon emissions in scope one.
Comes from jet fuels and this is basically.
To ensure our product safety. So this is very important if we put all the scope one and two together this jet fuel still 38% of the of the our nation and scope.
For for energy purchase is about 37% and all the other are there other source advantages are about 25%. So that's why we're putting so much effort on our staff both on production, but to utilization in the near future.
And our goal is to to use 100% of renewable source.
Perfect. Thank you and now I'd like to speak to this guidance.
We received several questions about new technologies, and we will consolidate them here at many questions about the challenges for SaaS hydrogen and electrification, which of them do you believe will play the key role.
It's a very good question.
I believe that's the this solution to really be a combination of.
Of all these technologies that.
Emerging so there will not be one single technology one single.
Solution a company there to solve so.
So concerted.
Efforts from all state.
Many stakeholders and several technology will be required electric and hybrid electric maybe for smaller and medium airplanes. As you go up the ladder than Samson and hydrogen if I had to single out one of these technologies I would mention sauce.
Because <unk> is the only one which is dropping meaning that once we have the ability to have 100% SaaS flying the airplanes and when we have scale.
And.
The right price points.
The entire fleet will be able to operate with Seth. So this is the one that would have the quickest results but of course the challenge is availability.
Logistics ends and the and the price points.
Okay and now Francisco.
One question for you why focus on ESG at this moment of the company.
Well the.
Climate change as I said before the climate change is one of the greatest challenges we have.
So the temperature of the planet continues to grow.
As well as our society still faces huge social differences.
And we believe the companies have a play a key role to tackle those challenges.
I think there are have been doing a lot.
Uh huh.
In product efficiency Elvis show to us before also in social programs and governance.
But we recognize that it's fun to be bolt.
We have to move to <unk>.
New level, that's why timber here, we are we are committing to new ESG goals.
To a low carbon economy.
And also to a more inclusive society.
Perfect. Thank you and now another question for Greener.
Could you explain how to achieve 100% renewable sources in electricity grow globally by 2030.
Yeah. That's a good question in fact, 50% of our energy is already renewable and and the main reason is the Brazilian energy matrix.
So we we are pushing the Brazil to be 100% renewable and that will mean, 65% of our energy utilization and outside of Brazil, we have some some choices some alternatives to solar and too.
When both are purchasing or self protection. So that's our goal.
Perfect.
Another question to Luis Carlos now regarding new products, you mentioned in Youtube prop how the new plane is connected to the strategy of low carbon emissions.
Yes.
We added 32, new profit it's good to have the opportunity to mention that this is not yet launched project, we are still studying and talking to potential partners and customers.
And Bob would play.
An important role in.
Uh huh.
Neutral carbon strategy.
Because fewer pumps are much more efficient than jets in terms of fuel consumption and emissions the eh.
Propulsive efficiency over to profit because of the big propeller is bigger than that of of jets and Thats why we are proposing a turboprop with innovative characteristics.
That's who will be able to replace jets current T piece and not popular or not comfortable they are too noisy they were great.
And our proposal will be Jeff like T. P. With the only difference that's easy to use from 'twenty and maybe short routes, even 40% less few any meet up to 40% less carbon so it would be an importance.
Airplane.
If we come to launch it hopefully we will do.
And now Greener the company launched a new social program. What do you expect will be the real impact on society and minority groups.
Yeah. So.
There is a a a huge gap between the demands.
Of our technology and the talent qualification in these fields.
So if you think about the underserved population this GAAP because of social and economic reason this GAAP is different even higher.
And our idea on the on the social tack initiative is to build a bridge.
And and prepare those those talent, especially people from underserved AR to be qualified and also for our needs, but also tool to help those.
You know you, especially to have a better career opportunity. So the idea is to have a a combination to.
To develop talent for our own needs, but also to the to the society tool provides a good career opportunity. So a dance we believe that we can we can build is this bridge and closed is this GAAP, while offering a more.
Opportunities in the society.
Yeah.
And now let's move on to the last question of the day.
Two Francisco.
Can you please provide more details on how and where thinks it can double its size and what timeline are you talking about and how is that possible.
Good question I was expecting this question actually.
So well I mean, our.
Our guidance. This year for example show shows in the commercial aviation delivered between.
45, and 50 aircrafts so.
In the medium term.
We believe we will be able with the market recovery to be back to pre pandemic levels. This is more of a double of the.
This this number so going from.
45% to 50 to something closer to 100 and executive Jets. So our our guidance. This year is between 1995, we believe in the medium term will be over one.
<unk> 'twenty when 20 aircraft a year, we also expect a stronger growth in our service area.
For example, due to the GTS a maintenance contract.
We have an nordmann imports.
In Portugal.
Uh huh.
It's a 20 year contract that we allow us to almost triple the revenue of that that company in Portugal with a very important impact for Embraer as well also we are planning to gain to capture more market share within the Embraer fleet for our service.
And I was always stronger grow growth in the agnostic year area. So with all this combination we believe we have potential to almost double the revenue in.
In the medium term that's the rationale behind this and it's feasible. It's a it shows in our no new fit for growth a strategy plan.
Thank you Francisco.
Hey, everyone.
That's all for today. Thank you so much for your audience and many things so embraer leaders for being here and I Hope we can meet again in the near future for another special moment like this in the meantime stay safe Goodbye and see you soon.
Thank you.
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