July 20, 2018 / 8:31 PM / a year ago

UPDATE 1-Embraer backlog, deliveries down in the second quarter

(Adds market reaction, analyst comment, details of backlog)

SAO PAULO, July 20 (Reuters) - Deliveries by Brazilian planemaker Embraer SA fell in the second quarter from a year earlier and its backlog fell sharply as it dropped an order from an inactive customer, according to a securities filing on Friday.

The planemaker delivered 28 commercial jets to airlines in the three months through June, down from 35 planes a year earlier. Executive jet deliveries fell to 20 aircraft, from 24 jets a year before.

Embraer shares fell nearly 2 percent in Friday trading, pressured by a sharp appreciation of Brazil's currency, which hurts the planemaker's export-focused business.

Embraer's firm order backlog, a gauge of expected revenue, fell sharply as the planemaker removed an order for 50 of its next-generation E2 passenger jets placed by Indian carrier Air Costa, which suspended service last year.

With that, the backlog fell to $17.4 billion at the end of June. In March, the backlog stood at $19.5 billion under a new accounting method including all service and support contracts. Excluding most service contracts the backlog stood at $18.1 billion in March.

Analysts on the BTG Pactual sales desk say the loss of the Air Costa order had been widely expected.

Embraer drummed up fresh orders for more than 100 passenger jets at a the Farnborough Airshow this week as it sought to fight off a partnership of Airbus SE and Bombardier Inc on a competing small narrowbody jet.

Embraer has reached a preliminary agreement to hand over control of its commercial jet operations to Boeing Co in an effort to square off against the Airbus-Bombardier alliance. However, executives said they do not expect to finalize the deal until late next year, forcing Embraer to compete single-handedly against the European and Canadian rivals. (Reporting by Carolina Mandl Additional reporting by Marcelo Rochabrun and Gabriela Mello Editing by Brad Haynes and Sandra Maler)

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