Good morning, ladies and gentlemen and welcome to the audio conference call that will review Embraer’s First Quarter 2015 Results. Thank you for standing by. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions to participate will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded and webcasted at ri.embraer.com.br. This conference call includes forward-looking statements or statements about the events or circumstances which have not occurred. Embraer has based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting the business and its future financial performance. These forward-looking statements are subject to risks and uncertainties and assumptions, including, among other things, general, economic, political and business conditions in Brazil and other markets where the company is present. The words believe, may, will, estimate, continues, anticipates, intends, expects and similar words are intended to identify forward-looking statements. Embraer undertakes no obligation to update publicly or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking statements and circumstances discussed on this conference call might not occur. The company’s actual results could differ substantially from the anticipated and the forward-looking statements. Participants on today’s conference call are Frederico Curado, President and CEO; Mr. José Filippo, Chief Financial Officer and IRO; Mr. Eduardo Couto, Director of Investor Relations. I would now like to turn the conference over to José Filippo. Please go ahead, sir. José Filippo: Okay, thank you and good morning, everybody and thank you for joining Embraer first quarter 2015 results. As we usually do, we go through the presentation and then we will be ready for questions in this session. Starting on Page 3…

Thank you. [Operator Instructions] Our first question comes from the line of Pete Skibitski of Drexel Hamilton. Your line is now open.

Good morning guys.

Good morning.

I want to ask you I am guessing that you didn’t collect on the large KC-390 receivable from last year during the quarter. Can you update us on your expectations for collecting that and is there any contemplation to slowing the program down? José Filippo: Yes, Pete. Actually, this program goes as we expected. As we indicated before, we are focused on maintaining and are going to increase this account receivable. So, that’s basically the pattern that we have for the first quarter. We had actually a little bit increase in the accounts receivable for the quarter, which was actually the snapshot of that in the end of March, but we received a portion, about a $50 million in the beginning of April, which returned back to the level of the end of the year. So, basically that’s the profile of that account.

Okay, understood. Thank you. And then just one follow-up, can you give us a sense of how the segment operating margins trended in the first quarter?

Yes, it’s Eduardo here. We had consolidated operating margin of 7.5% in the first quarter, commercial aviation was around 12%, business jets around 6%, and defense and security was around negative 9%.

Okay. Just on that defense, that’s the lowest I recall for defense in a while. Any particular one-timer impact that? José Filippo: Yes, yes, Pete. Actually, the defense as it has its revenues or its contracts more exposed to the real. We have to do an adjustment of FX base every quarter. We usually do this – we do this every quarter, but in this quarter as we had an appreciation of the dollar, which is actually about 20% that impacted negatively. But it’s a non-recurring effect. It shouldn’t be repeated going forward.

Okay, great. Thank you so much.

Thank you. Our next question comes from the line of Turan Quettawala of Scotiabank. Your line is now open.

Yes, good morning. I guess, maybe just as a follow on there, could you give us a sense of what that non-recurring item was, how big it was?

What non-recurring?

On the D&S business, you said there was an adjustment on FX that was non-recurring? José Filippo: About $30 million.

Okay, that’s helpful. Thank you very much. Okay. And I guess my next question just when I look at the sort of the longer term strategy of the company I guess if I look back 2 to 3 years, your defense business was supposed to b, I guess the growth leg here. E-Jets were kind of getting to a bit of a holding pattern and obviously that seems to have come true here with E-Jets kind of flattening out a little bit. But obviously, the defense business is coming in a little bit weaker. So, my question I guess is, are there any other levers that you can pull here? The Biz Jets seems to be getting a little bit better, but certainly not as strong as maybe you would have liked or have the cards certainly been dealt? And I think you kind of have to just make the best of the situation here. I am just trying to figure out what kind of earnings levers you have over the next couple of years here?

Yes, this is Fred. We – commercial aircraft, it’s doing good. We have been able to sustain and actually increase quantity a little bit. Also have been able to so far to offset pricing pressures with more efforts, with lower costs and try to preserve margins as much as we can. So, that’s a sound business. Business Jets, I mean, we had a particularly weak quarter. We missed a few deliveries. So, that’s why we are optimistic about increasing the numbers in the next few quarters and meeting the guidance as far as deliveries and revenues in that business. And again, that’s also a growth engine for us, because we are still ramping up the Legacy 500s and we will have the Legacy 450 joining our portfolio at the end of the year. So, there is growth in that segment for us. In defense, we have, of course, a strong dependence of the Brazil’s armed forces. We have a lot of execution. We have a lot of contracts, which assures us a very stable outlook for the next few years, most importantly the KC-390, of course, but that’s a financial concern. I mean, we have the payment problems. I mean, we have to believe that this will be solved soon. And we see Brazil in the next couple of years regaining traction and we continue to be positive in the long-term for Brazil. And so, as the defense business is a long-term business, we are – I mean, it’s we are not really too much concerned about the long-term viability and the full potential of that business. As soon as we introduce the KC-390 in the markets, then we have another product for export. So, that should be an add-on, a step function in that business as well.

Okay. Thank you for that clarity. I guess, just one more question from my side. I know it’s still early, but there has been about a bunch of changes here at Bombardier, just wondering if you have seen anything change from a competitive standpoint? I know there have been a lot of aggressive pricing there in a lot of your markets there from then, just wondering if there has been any change there?

Well, they have been aggressive, very aggressive for some time. So, I would not have noticed, not personally any significant change. I think it’s – Alain is a capable guy of course and – direct answer to your question, we did not see any specific change in that regard.

Okay, thank you very much.

Thank you. Our next question comes from the line of Cai Von Rumohr of Cowen & Company. Your line is now open.

Yes, thank you very much. So, help me understand your gross margin was spectacularly good, 23.7%, despite a pretty lean mix. You didn’t have any 190s, 195s. So, you had all the lowest margin commercial aircraft. So, where do you expect gross margins to be for the year? And while I understand the revenues maybe under some pressure, do you feel that your EBIT margin number maybe has some opportunity? José Filippo: Cai, thanks for the question. Yes, I think we have a situation in the first quarter, which shouldn’t be the same for the rest of the year. I think that we have – if you think about the whole year, we should be back to the level of – as we indicated like level – the high two digits – sorry, the high teens as we indicated before, but we shouldn’t be in the same situation in the first quarter. I think there is a combination of things here. If you take like executive jet business in this first quarter, we had the lower deliveries with specific good margin on the models that we delivered, combined with a higher participation of the service and parts that led us towards this higher gross margin. And also, services in commercial aviation also helped, but we shouldn’t consider that as a trend for the whole year. We will be back to what we indicated before throughout the guidance that we set out. Basically, that’s what we should work on.

Maybe help us understand, so if you – what you are talking about is the guidance of the EBIT margin, but maybe help us understand some of the pieces, for example the G&A was lower than it’s been, presumably that’s helped by the real. And where should we expect this gross margin, because just as we look at that quarter, the delivery mix is certainly going to get better, as we go through the year, so is that gross margin going to be lower than the first quarter, even though the real is basically going in the right direction and the mix looks like it’s going in the right direction? José Filippo: Yes. I think that the gross margin should be lower than what we have in the first quarter, like we said. Definitely the expenses are being positively affected by the exchange rate. We said that before that there is a potential benefit if the exchange rate remains in that higher level and that’s what we expected. But basically, I don’t think that the margins of the first quarter should be something that should remain when we take the whole year. Again, we are still relying what our expectation that we indicated early this year, when we released the guidance figures.

You mentioned – this is last one, you mentioned that service was a plus for both biz jets and commercial, can you maybe give us a little of specifics in terms of how much the service business was up year-over-year in the quarter and approximately where it would go for the remainder of the year? José Filippo: Normally, again, like I just mentioned – I mentioned that and specifically, I think the higher impact was in the executive jet business. Typically 10% of the revenues are of service and parts. We had 24% in this quarter and that brings to a little bit higher margin, but I think it so much a specific for the quarter, which again we shouldn’t expect the seasonality of this business will probably be more into the delivery itself rather than service and parts going forward, just like a situation that we had in the first quarter.

Thank you very much.

Thank you. Our next question comes from Noah Poponak of Goldman Sachs. Your line is now open.

Hi, good morning everyone. José Filippo: Good morning.

Can you just talk about how you are able to now change the total revenue guidance, given what transpired in the defense business and the impact from FX there? José Filippo: Although I think that the guidance for the revenues – again, we are still maintaining that, with the expectation that defense business should be affected from the exchange -- the FX, that already impacted the guidance, if you compare it to last year’s figures of defense. But this first quarter is something that we made this adjustment, like we mentioned that impacted the revenues, that shouldn’t be – we don’t expect to see that in the current quarter. So that’s probably why you are seeing that. But we are still keeping this projection that we indicated before.

Maybe I could add, Noah. We are still under the assumption that the main program, the KC-390 – the three main programs, this is from KC-390 and the satellite, there will be – one way or the other they will be kept in tune [ph], so we are under that assumption. We will for sure have a reduction in the pace and maybe even the quantity of the modernization programs. So that, yes, that goes straight to your question, so there will be reduced revenue there, but that’s not the most important piece of it. On the other hand, we have some prospects of exports, of Super Tucano, which at this point we believe may offset any eventual reduction on the Brazilian side. So I think the best view that we have at this moment is to maintain the guidance. Again, with the three big assumption – with the big assumption of those three main programs being kept intact.

Okay. And there is no change to your assumption for the real in the outlook, is that correct?

Yes. We are still through the really based there as we disclosed to you, at 2.8. It springs all the way up to 3.2, is now back to 2.9 or something, right? So I didn’t...

Yes, 2.9.

Yes. So the forecasters in Brazil are all over the place from 2.80 to 3.10. So we should be – so if we have any risk there, it’s probably a little bit of an upside risk.

Okay. And Fred, you mentioned that you missed a few executive jet deliveries in the quarter, can you just elaborate on that, is that just purely random timing or was that customer choice to defer or what happened there?

We have to be totally transparent. We had I think, two or three airplanes with customer, just kind of a few weeks deferral. We also missed I think, a couple of airplanes in production, believe it or not, which is not – haven’t happened really for some – probably some supply chain issue or something. But – so we should see probably four or five airplanes that what we missed in the quarter. So we are talking about $100 million and $120 million more or less, which should be added on through to the revenues of the first quarter. So that of course impacted negatively.

Okay. So will all of the Legacy 650, Phenom 300 and Phenom 100 have deliveries down this year and anything you could say about what you think those do next year, just kind of the Legacy airplanes?

I am not sure I get the question, Noah?

Yes. There I guess, the Executive Jets excluding the 500 and 450, are they down this year and then are they down or up next year? José Filippo: Yes, we don’t really disclose that as in a forward way. So we really group them together, the four models, the 450, 500, the 650 and the Lineage 1000. And we would really prefer to stay as a block large aircraft. We never disclose and I don’t think nobody does. I don’t think anybody does disclose model by model as far as giving forecast for referral for deliveries.

Yes. Okay, thanks very much.

Thank you. And our next question comes from the line of Derek Spronck of RBC Capital Markets. Your line is now open.

Good morning. My first question is on the business jet side. Are you seeing any improvement in the used business jet market in terms of both pricing and inventory levels?

A little bit of a recovery in the U.S. markets, not substantial though and the rest of the world, no real change to our last report, which is of course China was a very important market, which significantly slowed down. And the Brazil, particularly for us was also an important market, which also slowed down. So what has been offsetting this is the U.S. market, which has been growing. So it’s pretty much the same picture as we reported a few months ago.

Okay. And the Legacy 500 how is that resonating with your customers and in particular what regions are you finding the most I guess interest on the product right now? José Filippo: As far as a percentage, the U.S. for sure, but we -- the last week, we closed one in Brazil, one in Australia. So it’s really getting traction. And we are not as – if you remember, when we disclosed our guidance for the year, some people were a bit frustrated by the number. They expected higher numbers. We are really trying to have a very solid ramp up and in-service support – enter into service support, but it’s – frankly, it’s all over the world, but as far as the bulk of demand, it is also in the U.S.

And if I could, the Phenom product line has been very successful and you have sold quite a few. And I guess the pricing reflected that as well in terms of getting the good value for your money and as such gathering quite a bit of market share over the past few years. Is that the same sort of strategy you are going to rollout with the Legacy 500 and 450 or you are going to try to be a little bit stickier on the pricing front? José Filippo: That’s a good question, Derek. The Phenom 300 is the market leader in its segment by far and it is the most expensive airplane in the segment. So, this is the perfect – when you find perfect sweet – sweet spot for a product, it’s a desired aircraft. The 500s, we see with the potential to become exactly the same in its segment. We are indeed facing and I have commented on that before, facing price aggressiveness from some competitors with larger aircraft than the 500s, coming down to let’s say the 500 segment, but we have been very disciplined to hold our pricing. This is a brand new product. It’s probably the most updated, most modern aircraft out there today. And so we are really trying to hold our price to develop the airplane. We will not jeopardize an airplane, which has decades of prospective for this short-term pressure. So – but having said that, we are – I mean we are getting a very good resonance about the acceptance of the aircraft. People see the value of the aircraft and they are gradually coming through to accept to pay what we think is the right price for it.

Yes, that’s great color. And if I could just quickly on the regional – the commercial side, I know the E-190, 195 doesn’t compete directly with the CSeries, but there obviously would be some overlap in some of the tender activity out there for the airlines. As the CSeries kind of becomes more – closer to launching into production, are you seeing the airlines kind of shifting a little bit more positive towards that program or is it becoming more competitive? And also how is Bombardier positioning that from a pricing perspective? Are they being as aggressive with the pricing as they have been with their CRJ line up?

Well, we – if we separate just for a moment, let’s say, the regional market, let’s say the typical regional market 70, 80-seater to the larger aircrafts. So, there is activity going on for the E1, let’s say our E1 and of course at CRJ. There is activity going on. We are optimistic with a few campaigns and we see campaigns actually all over the world, not only in the U.S. We have this great success at KLM announced last month I think. And we may have a couple of other contracts, which we will be able to announce sometime, not in the distant future. Boeing and Airbus, they have really been very successful in securing a long backlog for its CU and new versions or current and max versions. So, what we see is that the airlines, there is a huge commitment as far as narrow-body for the next several years with Boeing and Airbus. So, the impetus of looking at into smaller planes such as our E2 or the CSeries, it’s more or less on the – closer to the Boeing and Airbus than what we are. So, I think that’s the real issue. I mean, there is a lot of capacity already taken by the A320 family and the 727 family and the airlines there still – they don’t need to make a strong move at this very moment. So, that fits, I mean, nicely for us, because we will not be in the market until 2018 anyway, but it’s an uphill for anybody trying to get new orders from airlines, which have their hands full with huge orders from Boeing and Airbus. This is more or less how we see the competitive market.

That’s great color. Thanks a lot. Appreciate it.

Thank you. Our next question comes from the line of Myles Walton of Deutsche Bank. Your line is now open.

Hi, good morning. Hey, Fred, I was hoping to just follow up on that last comments made around the campaign for the near-term. It was good to see one non-U.S. campaign hit with KLM. Are these also outside of the U.S.? And would they come as soon as Paris?

Well, hopefully, as you know, we cannot make – probably said too much already, but yes, at least – we are optimistic about at least one outside the U.S., maybe something in the U.S. as well. Timing always depends on the customers, but it is at the point that it makes us feel good about it.

Okay, that’s good. And then the other – you mentioned about the business jets missing a couple of deliveries of production, maybe didn’t click the way it was planned to this quarter on the supply chain. Was that on the 500 or was it on the one of the more mature programs?

I don’t know. Does anyone know? I think was – I think Myles, I – well, I probably should get you a more precise answer later on, but I think it was the Legacy and the Phenom, I think, but it was a question of days or maybe a couple of weeks. So, it’s not a big deal. I was just trying to be precise in what I am saying.

I appreciate the transparency, Fred. And then the last one was on the $30 million in D&S in the quarter that you called out as being kind of a true-up to the FX effect on your programs. I just want to clarify that was revenue, not profit, correct? José Filippo: Yes, revenues.

Okay. What was the profit impact or the EBIT impact?

$30 million is profit.

Okay. So, was it a drop through on both? Was it an EAC? José Filippo: Actually, it reduces revenues and profits, but the amounts are very close, close to $30 million both.

Okay, alright. Thanks guys. José Filippo: Thank you, Myles.

Thank you. Our next question comes from the line of Ronald Epstein, Bank of America Merrill Lynch. Your line is now open.

Hi. Ron is actually on an airplane right now. So, this is Kristine Liwag calling in for him.

You have change of voice, Ron, so…

So, the question we have is – so the development work on the KC-390 rolls off this year, and if all goes along to your schedule, development work on the E2 should also end by 2020. With a very experienced engineering team, where do you think the opportunities will be next? Is it large cabin business jets, next generation turboprop, small twin aisles, small tactical fighter jets, I mean, where do you think future growth for the company will come from?

That’s a million dollar question, right? That’s an issue that my team and my board are all, of course, thinking about. So, we will see. I mean, I really cannot tell you now and we have of course ideas and we have plans and possibilities. We really have to focus on execution. We have a lot on our plates at this stage. I have never done that many number of programs in parallel, but be sure that it’s top of my list what do we do with this capacity going forward, but we have – I will just benefit from your question to say, for example, in business jets, maybe I can give a little bit more color. My real focus there for the short-term, short and mid-term is really to consolidate the business, make sure that our Melbourne operation achieves its full potential. As you know, we are also going to produce the 450 and 500 in Melbourne, consolidate our support – customer support to infrastructure and frankly boost our cash generation from that business. We also have that cash generation to support our investments in the commercial jets. So that is as far as I can tell you, but beyond ‘17, ‘18, when we start to have some availability, that’s something we have to sort out in the next probably 18 months to 24 months.

Okay, great. And then on biz jets, when you look at the orders that you have right now in your book, what percent of that is in the U.S. versus international. And then, in terms of where you think orders will come from, is it also U.S., but what’s the split between U.S. and international?

Yes. I don’t think we divulge percent. And I would not know anyway, so. But as far as new orders, the U.S. is the main source of new demand. But a snapshot of our backlog today, I would not know.

Great. Thank you.

Thank you. Our next question comes from the line of Stephen Trent of Citigroup. Your line is now open.

Hi, good morning guys. And thank you for taking the questions. I guess firstly, like what is your view of commercial aircraft demand from the U.S. airlines, I mean you already kind of touched on it, but I mean – in addition to the Republic order, do you see like maybe like United Airlines getting interested or do you see the legacy carriers more looking at used planes, instead of ordering new ones, do you have any color around – on this?

And that’s the first?

Yes.

Yes. Okay, Steve, good morning.

I am sorry this is Kevin instead for Stephen Trent.

I am sorry. That’s in Portuguese waiting for usual. I am sorry. Yes, we see continuous activity in the U.S. definitely for the E1. We cannot mention any names, of course. We announced those five for Republic recently. And they are -- I mean there are an outstanding number of options there. And the airlines, as soon as – the faster they can replace their 50-seaters, the more they are going to order aircraft. So we are probably bullish about see the potential in the U.S. and our ability to compete. So, we believe we have a good product and the experience in service of the recently delivered E-175s with the improvements has been excellent. So everybody who is flying the airplane, I mean this new version of the airplane is really, really thrilled. So that creates a virtuous circle, and hopefully it will keep us in the lead to satisfy that demand.

Okay, great. And I guess, just coming back to the KC-390 development program and all the other ones that you have on your plate, you said that you have never really had as many projects online at the same time developing, if the payments from Brazil’s government continues to get delayed, do you have any options to continue funding the development or I mean, could you see something similar to what Bombardier had to do with the Learjet?

We – well, in the KC-390, KC-390 is a key program. So I definitely do not see Embraer funding the program. So let’s say the current and the best picture we have today is the continuation of the program as planned or closed to as planned. But also, we have to consider a less optimistic scenario, where there is a slowdown and a stretch out of the development phase. That’s a possibility and we are discussing with the government, very openly. And fundamentally with the standpoint that either they are able to sustain the current pace of development or if they are not we really need to sit down and reprogram it. I don’t – we do not see any scenario where the airplane is dropped down. It’s just – it’s we are way down the road will be really not very smart to stop this program at this stage, having the first prototype already in flight and almost the whole development done. So what is there is a flight test campaign, two more years to go. And so, we do not see a scenario where we are going to just stop the program. So the worst case scenario in our perspective would be a slowdown and we dimension with the program which of course then we would adapt ourselves on the cost side to cope with that, but that’s not what is there today. Today, the discussion is to how to preserve the program as it is and how do we get delayed payments fundamentally.

Okay, okay, very helpful. And then finally just circling back on, I guess, EBIT margin, you talked about, I think the biz jet side. On the commercial segment, margin change year-over-year, do you know what portion came from higher production levels versus I mean any FX effects on like SG&A and costs?

Combination of – I think it’s.... José Filippo: We had a couple of things. We had the FX that helped us on commercial aviation. We also had the higher deliveries right. We have delivered 20 jets versus 14 last year. And also we are – we also had some efficiency gains as we only delivered the E175s that have been mentioned that we increased the mix of E175 even though it comes at a lower price. We have efficiency to gain as far as productions and that’s what we are showing in the results. So, I think it’s a combination FX, efficiency gains and the higher deliveries that we had in the quarter.

Okay, thank you. And like how much would you say was from like efficiency gains and how much was from FX?

No, we cannot disclose that. We don’t have that prepared, but basically it’s – like we said, it’s a combination of that. It depends on the number on the specific period that we delivered. So, it’s all together. That’s how we approach that.

Okay, great. Thank you very much.

Thank you. Our next question comes from the line of Alexandre Falcao of HSBC. Your line is now open.

Hi, good morning. My question is regarding the – if there is any delays on in defense? In terms of accounting, how are we going to actually going to see this flowing through results? What I mean is if we see some sort of real contingency in the government, does this mean that you guys are going to cut the revenues from this or are going to maintain revenues and just book it as more receivables? So, I just want to see exactly if there is any delays specifically on the big programs, how we are going to see this flowing through results? Thank you. José Filippo: Alexandre, actually the way it works, those type of contracts, they are recorded as a percentage of completions. So, normally, as you advance in the development of the program, you recognize the revenue. So, the impact – if for some reason this program will review its schedule, for example, it’s going to be like lower deliveries because of the percentage of the advance of the program, which we don’t expect, as Fred mentioned, that should happen. But so that’s typically how it works. It’s not a question – it’s not – we are not invoicing, for example. It’s just like more percentage of completion advancing then it’s recognized as revenues. That’s how it works.

Okay, but would you stop the – because, I know you guys are in the final stages. We are almost flying this aircraft right now. Would you continue the completion even if you don’t receive any money from the government? It’s what I am trying to understand, if there is, because in the press each and every day, there is a news that the finance minister and the planning minister are going to announce a big budget cut or at least budget contingency. So, I just wanted to see how – if any, if there is going to be any impact in the P&L here?

Yes, well, the answer is no. We will not continue without the proper – I mean the applicable payments. I mean, there is a delay of course. When they stop paying us, I mean, we did not stop the activities for a few months. So, we have not started or stopped so far under the belief that they will resume the payments and normalize – eventually, normalize that very unfortunate situation. If the cuts are permanent, I mean, we have no other option than to stop it, but again, I don’t think this is the likely scenario, would be – would not be a – I mean that’s not a very smart place to cut frankly, because this is a needed airplane, the potential source for exports, but theoretically if that happens, yes, we will not fund, we cannot fund the rest of the development by ourselves. We will not do that.

Okay, thank you so much.

Thank you. Our next question comes from the line of George Ferguson of Bloomberg Intelligence. Your line is now open.

Thank you and good morning. The – as I look at the backlog for the E2 program, it doesn’t look like there has been any successful campaign in the last two, three quarters. I was wondering if you could catch us up with how campaigns are going for the E2 program right now?

Yes, okay, that’s a fair question. There is a lot of activity. And I will just refer back to a previous question. We had a very good start at the launch of the program with bulk of launch orders. And the airlines as we are still relatively far from first deliveries, there is two relative – three years from first deliveries. The airline is having a lot of orders for Boeing and Airbus products. They really – I mean they are comfortable in waiting a little bit more. So, that’s the – that’s kind of the background. Having said that, we do have a lot of activity, we have several campaigns going on around the world at different stages, but we are not particularly anxious about the very short-term, because first we have the bulk of launch orders, which take several of us from the initial deliveries. And second because we understand that there is this outstanding backlog for Boeing and Airbus, which reduces the appetite for the airlines for short-term commitments.

Okay, thank you. And is there a timeframe we should think about where we would start to see E2 orders be reenergized here, is it a couple of years out or how should we think about sort of the timeframe to...

Yes. As we approach the entry into service, which is 2018 of the first model, probably it’s the reason what you see some more activity within the 24 months before delivery, so sometime next year probably. That sounds right.

And are you seeing your airline customers change any of their thinking around new generation technology versus older, less fuel-efficient technology? Is – I mean do you see any sort of shift there? What’s – how is that affecting things do you think?

Yes, that’s the point. Actually that I failed to remark with the recent decrease in oil prices, that has also, let’s say, slowed down the urge for replacing aircraft. I don’t think we can call it a trend yet. It’s a very short-term effect or a short-term development, but the airlines – everybody – I think the industry is kind of a wait-and-see mode to see where oil will go. Let’s say if the oil stays at current levels, there will be of course less impetus from the airlines to raise and change aircraft, but in the long-term – mid to long-term, it’s – I think it’s an absolute certainty that the new airplanes, the new engines, the new generation of aircraft will dominate the picture.

Okay, thank you very much. I appreciate it.

Thank you. And our next question comes from the line of Bruno Amorim of Santander. Your line is now open.

Hi, good morning. I would like to know if in your opinion the 13% EBIT margin in commercial aviation could be seen as a floor for the full year, because you have said that what helped in this quarter was FX, higher deliveries, and efficiency gains. FX is you had three – you are going to deliver even more aircraft on a quarterly basis in the upcoming quarters according to your guidance. And I guess efficiency gains will still be there. That’s my question. Thank you. José Filippo: So, Bruno, I think that this is not a floor. I don’t think we should consider that, although that should be – consider that the important is the whole year. There is a combination of things that affect I guess – FX is also always important. Dilution like we mentioned before and some efficiency gains, sometimes you can benefit more or less on that, depending on the activity on the quarter. So, I don’t think that could be considered necessarily as something that should replicate going forward. I think that we – you should consider that back to the guidance range that we indicate in terms of revenues, I think would be the best way of...

Okay, thank you.

Thank you. And I am showing no further questions at this time. I would like to hand the call back over to José Filippo for any closing remarks. José Filippo: Okay. Again, I would like to thank everybody to join us. And of course, our IR team is always available. So, if you want to go forward with some questions, we will be ready to attend you. Thank you very much and have a good day.

This concludes today’s question-and-answer session. That does conclude Embraer’s audio conference for today. Thank you very much for your participation. Have a good day.