Record backlog, but deliveries still matter
- Embraer ended 2025 with a record $31.6 billion backlog, showing strong demand across the company.
- FY2025 revenue was spread across Commercial Aviation, Executive Aviation, Services & Support, and Defense & Security.
- The Services & Support unit is important because it brings repeat work after aircraft are sold.
- The 10% U.S. tariff issue has eased after management said Embraer aircraft, engines, and parts are exempt.
- The main risk is still the supply chain, which can slow aircraft deliveries even when orders are strong.
Orders are strong, output is the test
The bull case starts with demand. Embraer reported a record $31.6 billion backlog in Q4 2025. That is a large pile of promised future work, and it gives the company better visibility than it had a few years ago.
The mix also looks healthier. Commercial and Executive Aviation both have momentum, while Defense & Security keeps gaining attention through the C-390 Millennium. The KC-390 has won repeat orders, such as Portugal, and new selections, such as Lithuania. India is also a possible large defense catalyst with a request for 60 military aircraft.
The bear case is not about whether airlines and governments want the planes. It is about whether Embraer can build and deliver them fast enough. Management says the supply chain is improving for 2026, but still has bottlenecks. Engines, structural parts, and smaller parts can all hold back deliveries.
Valuation also matters. Finn's score is not saying this is a cheap stock. The story has improved, helped by the tariff exemption and record backlog, but investors still need Embraer to turn orders into deliveries, cash, and margin.
Aircraft sales plus repeat service work
Embraer makes money by selling aircraft and by servicing them after delivery. New aircraft sales can be lumpy because buyers place large orders and deliveries depend on production schedules. Service work is steadier because planes need parts, repair, and support for years.
The company has four main revenue pillars: Commercial Aviation, Executive Aviation, Defense & Security, and Services & Support. In FY2025, Services & Support made up 25.4% of revenue, and management has said commercial jets account for almost 40% of services revenue.
Defense adds a different kind of cycle. Programs like the C-390 Millennium and A-29 Super Tucano depend on government budgets and long sales processes. A win can be meaningful, but it can also take years to become deliveries.
Embraer also owns 83% of Eve, its electric vertical takeoff and landing aircraft business. Eve is still in development, so it is an option on a future market rather than a core profit source today.
Jets, defense aircraft, services, and Eve
Commercial Aviation
This includes the E-Jet family, such as the E190-E2, E195-E2, and E170s. The E175-E2 is paused because U.S. scope clauses, which limit aircraft size for regional airlines, still block the model.
Executive Aviation
Embraer sells light and medium business jets, including the next generation Praetor 500E and 600E. This segment benefits when corporate and private jet demand stays firm.
Defense & Security
The C-390 Millennium is the main watch item, helped by orders and selections in Europe. Embraer also sells A-29 Super Tucanos and is producing 15 Gripen E fighters in Brazil from 2026 onward.
Services & Support
This unit provides maintenance, repair, overhaul, and parts programs. It is valuable because it can keep earning money after an aircraft is sold.
Eve eVTOL
Eve is developing electric vertical takeoff and landing aircraft for urban air mobility. Its first engineering prototype flew on December 19, 2025.
Tempest Security Intelligence
Tempest is Embraer's cybersecurity business and became 100% owned by Embraer in 2024. It is small compared with aircraft, but adds a technology side bet.
FY2025 revenue mix
Segment shares are from Embraer's FY2025 Form 20-F. North America remains the largest geographic market, so U.S. airline demand and trade policy still matter.
What could break the thesis
Supply chain bottlenecks
High impact · High oddsEmbraer has orders, but it still needs engines, structural parts, fasteners, and other components on time. Management said 2026 supply is improving, yet a few bottlenecks remain. If parts arrive late, deliveries can slip and revenue can move into later periods.
E175-E2 stays frozen
Medium impact · High oddsThe E175-E2 development pause was extended for another four years. The aircraft does not fit current U.S. regional airline scope clauses, which limit what regional carriers can fly. If those rules do not change, Embraer loses a potential upgrade path in an important market.
Trade policy reverses
Medium impact · Medium oddsManagement said Embraer aircraft, engines, and parts are exempt from the 10% U.S. import tariff. That removes a near-term margin drag and helps the company compete. The risk is that U.S. trade policy changes again and brings the cost back.
Defense awards take longer
Medium impact · Medium oddsDefense demand looks better, but government aircraft deals are slow and political. The India request for 60 military aircraft could be important, yet timing and final selection are uncertain. Delays would not break Embraer, but they could push out a key growth story.
Customer credit stress
Medium impact · Medium oddsSome airline customers have been through restructurings. Embraer has already booked major write-offs tied to those issues, but customer stress can still hurt services revenue and collections. This matters because Services & Support is a key profit driver.
In one breath
What does Embraer sell?
Embraer sells commercial jets, business jets, military aircraft, and aircraft support services. It also owns most of Eve, which is developing electric vertical takeoff and landing aircraft.
Why does the backlog matter for Embraer?
Backlog is the value of aircraft and service work already ordered but not yet delivered. Embraer's record $31.6 billion backlog shows strong demand, but the company still has to build and deliver the aircraft.
What is the biggest risk for Embraer now?
The biggest risk is supply chain friction. Even with strong orders, missing engines, structural parts, or fasteners can slow deliveries and push revenue into future quarters.
Why is the E175-E2 paused?
The E175-E2 is paused because it does not comply with U.S. regional airline scope clauses. Those rules limit the size and weight of aircraft that regional airlines can operate for major airlines.