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In search of a new external association and seeking to signal the market’s reaction to the crisis, Embraer announced on Thursday (3) the cut of 4.5% of its 16 thousand employees.
They will join another 10% of workers who have joined voluntary redundancy programs.
The reasons are twofold: the impact of the Covid-19 pandemic on the airline industry and the end of the agreement whereby the American Boeing would buy the commercial aviation division of Embraer.
Together, the factors caused a loss of R $ 2.95 million for the company in the first half of this year.
The second quarter recorded the worst result in 20 years, with R $ 1.68 billion in losses. Only 4 commercial and 13 executive aircraft were delivered, compared to 26 and 25, respectively, in the same period in 2019.
Comparing the first semesters of the two years, the drop was 75%. The company says there was no cancellation of orders, but a change in delivery dates to airlines.
The International Air Transport Association estimates that, after a reduction peak that reached more than 90% in the main markets, 2020 will close with a 55% drop in the volume of passengers who flew around the world.
The entity foresees that the level of passengers transported will only return to the level of 2019 in 2023 and the gain according to the requirement of passengers per kilometer flown, in 2024.
The drop in demand had already forced the biggest manufacturers in the sector, Boeing and the European Airbus, to make cuts. The first announced that it will lay off 10% of its 160,000 employees in 2020 and the second, 15,000 of its 135 ml workers.
In relation to the failed agreement with Boeing, sewn since December 2017 and approved last year by the Brazilian government, which has veto power over the businesses of the old state, the damage is of another order.
Financially, R $ 98 million was spent to decouple the commercial aviation area, which makes the regional jets that dominate this market niche. But more important was the impact of this unraveling, which paralyzed Embraer’s production in January.
The divorce, announced by Boeing in April, was not amicable. Americans were already experiencing their own crisis, with 737 MAX production stalling due to problems that led to two drops when Covid-19 arrived.
Accumulating losses, they did not pay the disbursement of US $ 4.2 billion (R $ 22.5 billion this Thursday) by Embraer. They claimed that the Brazilians did not abide by clauses never disclosed in the contract, seen as details by negotiators here, and broke the deal.
The Brazilian said Boeing forced the termination of the contract because of its problems, to avoid paying fines. The case is now in an arbitration court in New York.
With all this, Embraer announced that it is seeking a new alliance in the international market. The initial focus should be on the development of a new family of turboprop aircraft, of lower cost and size. There is speculation with talks with Chinese, Indian and Japanese manufacturers.
Its military programs, on the other hand, have not changed due to the peculiarities of the sector. The Brazilian Air Force’s third C-390 freighter was delivered in the last quarter, and the company is hopeful of developing a light transport version in conjunction with the military.
Thus, the cut aims to show the market that the company is not passive in the face of difficulties. “The goal is to ensure the sustainability of the company and its engineering capabilities,” Embraer said in a note.
Embraer went through a restructuring of its leadership team, concluded in July, and closed an agreement with a banking consortium to finance up to US $ 600 million (R $ 3.2 billion this Thursday) in four years.
At the same time, he took action in relation to the workforce.
It adhered to the government’s provisional measure of reduction of wages and work for three months, paid vacations and collective vacations. Three PDVs (voluntary dismissal plans) were activated, which was not accepted by the metallurgical union of São José dos Campos, where the company’s headquarters are located.
The deadline to join the third program ended the fourth (2). The Labor Prosecutor’s Office said it will investigate allegations that employees were coerced into accepting the POS, which Embraer denies.
The company has gone through other crises in its nearly 51-year history. In 1990, it had to lay off about 4,000 people, sealing the crisis that led to its privatization in 1994. In 2009, amid the global economic crisis, there were 4,300 layoffs.
