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Friday, July 31, 2015

Brazil's Embraer delays cargo jet, loses revenue on defense cuts

Embraer KC-390Brazilian planemaker Embraer SA said on Thursday it will delay development of a military cargo jet and forgo $300 million of revenue this year due to Brazil's weaker currency and defense spending cuts, triggering the biggest drop in its shares in nearly four years.

Embraer now plans to deliver its first KC-390 cargo aircraft to the Brazilian Air Force in the first half of 2018 rather than the end of 2016, the company said in its quarterly earnings report. The plane is the biggest Embraer has made.

Second-quarter profit fell 10 percent from a year earlier due in part to its flagging defense unit, whose contracts have been cut back and stretched out due to a government austerity push aimed at shoring up Brazil's investment-grade rating.

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