Fitch revises Embraer’s outlook to positive, affirms BBB- rating

Investing.com -- Fitch Ratings has revised Embraer S.A.’s outlook to positive from stable while affirming its long-term foreign and local currency issuer default ratings at ’BBB-’.

The rating agency also affirmed Embraer Netherlands Finance BV’s unsecured notes at ’BBB-’ and maintained the company’s National Scale Rating at ’AAA(bra)’ with a stable outlook.

The positive outlook reflects Embraer’s growing product and geographic diversification, increasing revenue visibility, and expected profitability improvements from scale gains and cost-cutting initiatives. Fitch noted that supply chain bottlenecks have eased and are expected to normalize during 2026.

Embraer holds a strong position in commercial jets for aircraft under 150 seats and global executive jets, with a record backlog of $34.1 billion. The company faces some concentration risk, with approximately 60% of revenue coming from the U.S.

For the 12 months ended June 2025, Embraer’s revenue mix consisted of 32% commercial aviation, 30% executive jets, 12% defense and security, 25% services and support, and 1% other categories.

The aircraft manufacturer is currently subject to a 10% U.S. tariff, with the full impact estimated at less than $35 million due to Embraer’s U.S. operations, including local assembly of executive jets and domestic services.

Fitch projects Embraer’s EBIT and EBITDA margins to rise to approximately 6.0%-7.0% and 10%-11%, respectively, over 2025-2026. The rating agency forecasts free cash flow of around $217 million in 2025 and $97 million in 2026.

The company’s EBITDA leverage ratio is expected to trend down to 3.1x in 2025 and 2.5x in 2026, while maintaining an average net cash position of about $200 million over the same period.

Embraer’s 72%-owned subsidiary Eve is developing an electric vertical take-off and landing aircraft, targeting initial crewed prototype flight in late 2026, certification in 2027, and first deliveries in 2028. Eve has a non-binding backlog of approximately 2,800 units valued at $14 billion.

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