Record backlog grows, but supply chain limits deliveries
- Embraer reached a record $34.5 billion backlog, showing surging demand across the company.
- First half 2026 revenue was spread across Executive Aviation, Commercial Aviation, Services & Support, and Defense & Security.
- The Defense segment is gaining traction with new C-390 orders from the UAE and Colombia.
- The 10% U.S. import tariff was lifted in early 2026, removing a margin drag.
- The main risk remains the supply chain, which continues to slow aircraft deliveries through 2026.
Orders are surging, output is the test
The bull case starts with demand. Embraer reported an all-time record $34.5 billion backlog in the second quarter of 2026. That is a massive pile of promised future work, and it gives the company excellent visibility. Executive Aviation margins are strong, and the removal of a 10% U.S. import tariff expands potential profit.
The mix also looks healthier than in past years. Commercial and Executive Aviation both have structural momentum. Defense & Security keeps gaining attention through the C-390 Millennium, with the UAE ordering 10 aircraft and Colombia becoming the 13th country to select the platform. 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 but still has bottlenecks for 2026. Suppliers delivering parts late are still forcing aircraft to be moved late in the line, with better performance expected in 2027.
Valuation and performance metrics reflect this tension. The story has improved, helped by the tariff exemption and record backlog, but investors still need Embraer to turn those orders into physical deliveries, cash, and better margins.
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 the first half of 2026, Executive Aviation expanded to 32% of revenues, while Services accounted for over 25%. Management notes that commercial jets make up 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 recently completed its first partial transition to horizontal flight, but 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 remains paused because U.S. scope clauses still block the model.
Executive Aviation
Embraer sells light and medium business jets, including the Praetor 500E and 600E, and the new EV edition of the Phenom 300.
Defense & Security
The C-390 Millennium is the main watch item, with new orders from the UAE and Colombia. Embraer also sells A-29 Super Tucanos and produces Gripen E fighters.
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. Its prototype recently achieved its first partial transition to horizontal flight.
Tempest Security Intelligence
Tempest is Embraer's cybersecurity business. It is small compared with aircraft, but adds a technology bet.
First half 2026 revenue mix
Segment shares are approximate for the first half of 2026. North America remains the largest geographic market, so U.S. airline demand and trade policy matter.
What could break the thesis
Supply chain bottlenecks
High impact · High oddsEmbraer has orders, but it still needs engines, structural parts, and other components on time. Management noted that 2026 supply is facing a few bottlenecks requiring proactive management. If parts arrive late, deliveries slip and revenue moves into later periods.
E175-E2 stays frozen
Medium impact · High oddsThe E175-E2 development remains frozen due to U.S. scope clauses. The aircraft does not fit current rules, which limit what regional carriers can fly. If those rules do not change, Embraer loses a potential upgrade path in an important market.
Defense awards take longer
Medium impact · Medium oddsDefense demand looks better with UAE and Colombia wins, 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 push out a key growth story.
Customer credit stress
Medium impact · Medium oddsSome airline customers have been through restructurings. Embraer has booked 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 $34.5 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, late supplier parts can force aircraft to move late in the production line, pushing 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.
