After nearly two years of difficulties and challenges brought on by the international financial crisis, the aviation industry was marked by signs of stabilization and recovery in some of its segments in 2010. For Embraer, the year ended better than it started and, despite the adversities that the market still faces, the Company achieved its objectives and took one more important step forward in building its longevity and perpetuity.
Embraer's good positioning allowed us to take advantage of the opportunities that arose during 2010, and some significant results were achieved. We met or surpassed our corporate objectives and operational and financial-economic goals, in addition to reaching various milestones of programs under development, including the certification of the Legacy 650.
In addition, the constant efforts put forth through the Embraer Enterprise Excellence Program (P3E), mainly in its industrial operations, contributed positively to improving the Company's gross margin. Embraer strengthened itself operationally and financially, invested in its people and processes and in developing new products and new technologies, and continues to enjoy great credibility and acceptance in the market.
Current and new customers, mainly in the commercial aviation market, have begun procuring our aircraft once again, and the market, in general, has recognized our capacity to stand strong under difficulties, be competitive and preserve our economic-financial health. At the end of 2010, Embraer's firm order backlog stabilized at US$15.6 billion, after more than two years of decline.
In summarized retrospect of the relevant facts for the year, in the commercial aviation market, we gained some 100 new orders for the E-Jets, thus reaffirming the good positioning of these products in the market. There were 101 commercial jets delivered, which surpassed the initial estimate of 90 aircraft.
In the executive aviation market, Embraer also had a remarkable 2010, with the delivery of 145 jets, which was the largest number among all manufacturers, and represented 19% of the industry's deliveries. In other words, practically one in every five executive jets delivered in 2010 was made by Embraer. A special highlight was the important contract with NetJets, the largest executive jet operator in the World, to supply 50 Phenom 300 light jets, with options for an additional 75 – truly a seal of credibility for Embraer in that market segment.
In the area of Defense and Security, there were also numerous triumphs, like the first sale of the Super Tucano in Asia, with a contract for eight airplanes for Indonesia. Furthermore, international partnerships were formed for the KC-390 program with the governments of Brazil, Chile, Colombia, Portugal, Czech Republic and Argentina, giving a firm boost to future export business.
Several important dates were commemorated in 2010, like ten years of Embraer's presence in China and Singapore, as well as ten years of our listing on the New York Stock Exchange (NYSE), and ten years since our Gavião Peixoto plant went into operation.
For the second consecutive year, we were listed among the best companies to work for in Brazil, and we were recognized, by an important national trade publication, as the best company in the vehicle and transport industry.
We won awards for the transparency of our management and our financial statements, which endorse our position as one of the global companies that effectively practice the best principles of corporate governance.
As for the responsibility to preserve the environment, we are working with other industry stakeholders to reduce the impact of aviation on the environment. The target set by IATA is to achieve a 50% reduction of greenhouse gas (GHG) emissions by 2050, in relation to the levels in 2006. Therefore, we are involved on different fronts in developing more efficient airplanes and sustainable biofuels for aviation.
Embraer's commitment to building a sustainable future is established in all of its dimensions, and founded on our commitment to the United Nations Global Compact. In recognition of the actions carried out in recent years, at the end of 2010, Embraer was included in the Dow Jones Sustainability Index (DJSI), after having been evaluated as one of the best global companies in the aerospace industry, and ranked in the "Gold Class" in terms of sustainability practices. It is also important to point out that we were, once again, chosen to be listed with the ISE (Índice de Sustentabilidade Empresarial/Corporate Sustainability Index) of the BM&FBOVESPA, as has happened every year since the index was created in 2005.
November 19, 2010, was a historic day for Embraer. On that date, the General Meeting of Shareholders approved two important changes in our corporate bylaws: the name of the Company, from Embraer – Empresa Brasileira de Aeronáutica S.A., to Embraer S.A.; and the expansion of our corporate purpose, from a single focus on the aerospace area to adding defense and security, as well as energy. This can be considered as one of the most important changes made in the Company's 41-year history, once we open new doors for growth and for building our future.
Consistent with this development, Embraer Defense and Security was created in January 2011 as a corporate unit that will be autonomous and agile to meet the needs of current and future customers in the defense and security market, domestically and abroad. Brazil has played an increasingly relevant role on the worldwide geopolitical scene and, through its National Defense Strategy, has established a forward-looking vision for positioning the nation's defense material industry. The creation of this new business unit is an important step in consolidating Embraer's central standing within this context, which continued at the beginning of 2011, with the signing of partnerships and the acquisition of part of the capital of companies that have technology for developing radar, command, control, computation, communication, and intelligence (C4I) systems, and unmanned aerial vehicles (USV).
Regarding the expansion of our business into the energy sector, we have broadened feasibility studies and analyses for investments, while always keeping in mind our central competencies – those which will allow Embraer to compete and win customers and markets. We will move forward, as we gain a clear certainty about the potential return on those investments and the true benefit they can accrue for our Company and our shareholders.
We face the future with optimism and determination and remain firmly on track with continuous improvement and the practice of our values. We are bold and innovative, pursuing excellence in what we do, investing in our people and working to satisfy our customers worldwide, and create value for our shareholders. Last but not least, we are building our future in a sustainable manner
Frederico Fleury Curado
President & CEO
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