Embraer Posts First Quarter Results, Phenom 100 Price Increase

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Embraer's first quarter 2007 results include net income of $26.2 million following net sales of $843.4 million, citing difficulties in the supply chain of the company's 170/190 family for a year-over-year drop in deliveries from 27 to 25. Costs for the company increased due in part to longer production lead time and labor costs related to overtime work scheduled to match delivery timetables. Firm orders for Phenom 100 and 300 jets are nearing 400 and the company's overall order backlog reached a record high $15 million at the end of the quarter. Embraer announced that effective July 1, Phenom 100 aircraft will be priced at $2.98 million "based on January 2005 economic conditions," up from $2.85 million. To prepare for an expected production increase throughout the year, the company has hired 2,000 new workers since January. Most are expected to be employed to work a third shift and will be fully deployed in the third quarter. Training costs associated with those workers has dragged down the company's gross margin. A backlog and delivery forecast released by Embraer at the end of March listed 1,544 firm orders with 690 options, 1,090 deliveries and an order backlog of 454. Orders for ERJ-145 aircraft took the top spot with 732 orders, followed by Embraer 190s at 327.