José Filippo – Chief Financial Officer and Investor Relations Officer Frederico Curado – President and Chief Executive Officer Eduardo Couto – Director of Investor Relations.

Noah Poponak – Goldman Sachs Ron Epstein – Bank of America Merrill Lynch Alexandre Falcao – HSBC Myles Walton – Deutsche Bank Cai von Rumohr – Cowen and Company Turan Quettawala – Scotiabank GBM George Ferguson – Bloomberg Intelligence Peter Skibitski – Drexel Hamilton.

Good morning, ladies and gentlemen and welcome to the audio conference call that will review Embraer’s Second 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 call 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, uncertainties and assumptions, including, among other things, general, economic, political and business conditions in Brazil and in 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 those anticipated and the forward-looking statements. Participants on today’s conference call are Mr. 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..

Okay, thank you. Good morning and thanks everybody to joining our second quarter 2015 earnings call conference. As usual we’ll go through the presentation and then we will be ready for the questions after that. So, going to the presentation then we’ll start on Page 3, the financial highlights for the second quarter.

We reached our record ever backlog of $22.9 billion in the end of the second quarter. We had the positive free cash flow of $73 million in the second quarter; also reported operating income of a $102 million net income of a $159 million, and earnings per share of $0.7096, in the second quarter, almost $0.71.

Also an important event in the quarter was the issuance of a $1 billion notes, June 2025 would achieve kind of 505% per year, which was important in terms of meeting our requirements in terms of capital structure and demands in terms of investment going forward.

We finalize the financial results - sorry the financial highlights with important information about that we just released 2015 guidance adjustment, specially related to the defense business revenue revision but rating our EBIT and EBITDA range estimates. We’re going to be elaborating more about that in the presentation.

Next page, Page 4, in relation to the commercial aviation highlights. We delivered 27 E-Jets in the second quarter, accumulated 47 this year with a 102 firm orders announced in the quarter combining with the 124 year-to-date.

In relation to commercial activities, we recently announced several orders including Azul firm order for 30 E-Jets, Tianjin Airlines order for 22, 5 June, the third generation in the E2 model. Also eight, E175 for SkyWest, will operate the Alaska airlines.

Aircastle firm order for 25 E-Jets in new generation; Colorful Guizhou Airlines Firm order for seven E190; and the 10 E175 for United Airlines. Finalizing commercial aviation highlights, regarding the E2 program development, we had an important milestone in this quarter which is the started assembling of first prototype of E190-E2.

Moving to next Page, regarding Executive business highlights. We delivered 33 Executive Jets in the quarter split by 26 lights and seven large, accumulated the 45 in the year. Important achievement of our industrial activity in our Florida facility was the delivery of the Phenom number 100 assembled at the Melbourne facility.

In terms of new orders we announced the firm order of four Phenom 100 to Etihad Flight College in this quarter. And finalizing Executive Jets in relation to development of the Legacy 500 and 450 program, we had another important achievement of Legacy 500, it was the four new world speed records.

Regarding the 450 program we also remain on track and then deserves the schedule for the last quarter of the year. Now moving to next page, Page 6, in terms of Defense and Security highlights.

Starting with commercial announcements in the second quarter which was the sale of five Super Tucanos to Ghana Air Force and six Super Tucanos to Republic of Mali. Regarding the LAS program we continue to defense, in the delivery three aircraft in this quarter which now returns into eight aircraft to-date.

Also in terms of the modernization program, for Brazilian Navy we delivered the first AF-1B Jet Fighter to that customer. Finalizing the defense highlights in relation to the KC-390 program will start flight test campaign now in the third quarter of this year.

And for a program update, we expected now certification for the second half of 2017 and the entering to service in the first half of 2018. With that, we conclude the highlights in regarding to the financial results. Next, this page, after Page 8, before we get into the numbers for the quarter we like to inform about the guidance release.

We are maintaining our EBIT and EBITDA estimates. But in order to reflect primarily the devaluation of Brazilian real, we are reducing our Defense and Security business revenues range for 2015.

In the consolidated basis this reductions will also impact, of course the total revenues of the company, but this combined with the EBIT and EBITDA maintenance range, we will turn into a higher EBIT and EBITDA margin.

With that the new outlook to this, as we have in Page 8, for net revenues consolidated the new outlook would be from 5.8% to 6.3%, from 6.1% to 6.6%. In terms of Defense revenues, the outlook for 2015 $1.8 billion to $0.95 billion revenue from $1.1 billion to $1.35 billion.

In terms of EBIT remain in the range $490 million to $650 million, [indiscernible] to 7% and 60% [ph] but now the range increased to 8.4% to 8.9%. Sorry, to 8.5% to 9%, from 8% to 8.5%. And in terms of EBITDA remain in the range from $730 million to $860 million, with a new EBIT margin from 12.6% to 13.6%.

The other estimates for investment in free cash flow remain unchanged. Moving next page, Page 9, in terms of financial results now, showing our firm order backlog, we are reaching the end of the seven quarters as we mentioned before, 22.9% this is our all time high information.

Next page, Page 10, in terms of aircraft deliveries in the left side, that we delivered 27 aircraft in commercial aviation in the second quarter and have a total 47 accumulated to-date in the year. In terms of Executive Jets, we delivered 33 in the second quarter, broken by 36 light jets and nine large jets and accumulated of 45 aircraft in the year.

In terms of our outlook, we take the opportunity to confirm our expectations for 2015 which was a range of 95 E-Jets to 100 E-Jets, 34 Executive large jets to 400 Executive large jets, 80 Executive light jets to 90 Executive light jets. Next page, Page 11, in terms of revenues.

Consolidated and by business unit, we had the – in the second quarter the consolidated of $1.5 billion in terms of revenue, which it count now for $2.57 billion accumulated in the year. In terms of commercial aviation $883 million in the second quarter, accumulated of $1.64 billion.

Executive jets $404 million in the second quarter, accumulated of $0.67 billion; and in defense $216 million, accumulated of $0.43 billion in the year. In this page, we already show the adjusted defense revenues and consolidated revenues estimate. As indicated, now from $0.8 billion to $0.85 and consolidated now from $5.8 billion to $6.3 billion.

Continuing the presentation with the next page, page 12, the consolidated net revenues in Brazilian reais and U.S. dollars, we show the almost $2.6 billion accumulated in dollar terms turns into BRL7.7 billion in reais in terms of revenues.

For 2015, the outlook indicates the range of $5.8 billion to $6.3 billion, already a reflection on the new guidance, as we said before. Going forward to page 13, in relation to SG&A expenses we had $147 million SG&A expenses in the second quarter, split by $47 million of general and administrative expenses and $100 million for selling expenses.

This represents a decline when compared with the same quarter of last year, reflecting our cost control focus, coupled with the more favorable exchange rates. In terms of percentage of revenues, we are in line with the previous year of 9.7% in 2015 second quarter compared to 9.5% in the second quarter of 2014.

So, go to the next page, Page 14, as far as EBIT, we had a total of $102 million in the second quarter with a margin of 6.8%. And in terms of year-to-date figures, the total EBIT reached $182 million, with a 7.1% margin.

For 2015, we are maintaining guidance range for $490 million to $560 million, but increasing our margins’ range to 8.5% to 9%, as I said before. The next page, in terms of EBITDA we reported a total of $178 million in the second quarter with an 11.7% margin.

And turning to accumulated in terms of EBITDA for 2015, we have $327 million with a margin of 12.7%. In relation to the outlook, as we said we are maintaining our expectation for the range from $730 million to $760 million, but increasing the margin to, 1.6% to 1%, sorry 12.6% to 13.6% for the whole year.

The next page, in terms of net income we reported net profit of $129 million in the second quarter with a margin of 8.5% for net margin, and accumulated of $68 million in 2015. In terms of Brazilian reais, the net profit was BRL400 million in the second quarter, with accumulated of BRL203 million in the year.

Going to the next page, as far as free cash flow generation we had a positive free cash flow of $73 million in the second quarter, with $245 million positive from operating activities.

This was primarily due to the positive EBITDA coupled with the better figures for working capital requirements, especially lower inventories and increased advance from customers. As far as we mentioned before, we are maintaining our outlook for the year, which represents less than the consumption of $100 million in terms of free cash flow.

The next page, in relation to inventories - sorry, to investments, Page 18, we had a total investment in the first six months of $196 million, broken by $94 million investment in CapEx, $84 million in development, and $80 million in research.

We expect to see higher numbers in the second half for development and CapEx, primarily due to the development schedule of the E2 program. At this point, we are keeping our estimate of $650 million for 2015.

The next page, page 19, and finalizing the presentation before we go to the Q&A session, our capital structure showed an improvement in our net debt position, but also a debt profile improvement reaching the aggregate terms of 6.5 years, coming from 5.3 in the first quarter, mostly of course reflected by consequence of the issuing of the 10 year bond that we did recently, last month, which brought us to a better profile in terms of being able to meet our investment requirements.

And also, in terms of costs, this was important. In relation to net debt, we improved our first quarter figures basically because of the positive cash generation that we have in the second quarter, with now having the figure of $511 million in terms of net debt, coming from $581 million in the end of the first quarter.

And with that, we’ll close this part of the presentation. And now we are ready to open for questions. Thank you..

Thank you. [Operator Instructions] And our first question comes from Noah Poponak from Goldman Sachs. Your line is now open. Please go ahead..

Hi, good morning everyone..

Good morning..

Did you give us a new U.S.

date of BRL exchange rate in the revised EBIT margin range?.

Hi, Noah. It’s Eduardo. We are assuming now a BRL of 3.20 for the second half, which would imply an average BRL for the year of around 3.10 from 2.80 before, right? So, just to remind you..

Okay, great.

With the used aircraft value impairments, can you give us a little bit more detail on where those occurred?.

Okay. As we have followed the procedure that we have been doing in terms of the calculation, we have the process of the appraisers that do an average. And we do evaluate the reporting. In terms of the financials, you saw that reflected in the other net operating expenses, that typically, as you know, we work on the mid-teens there.

And we have a little bit more, like $27 million in this quarter. That primarily reflects that. That impact in that revision was the calculation, the way we record..

Yes, I guess I meant which aircraft type and sort of what are the implications of the related end market, that that’s still occurring in those aircraft type..

It’s more the 145 fleet..

Oh, okay.

So, it was not anything in the business jet market?.

No, no, no. It was commercial jets and more concentrated in 145..

Got it. And then, just the last one for me, is there any ability to - maybe it’s a little too early, but to start to discuss how we should think about the progression of defense and security segment growth beyond 2015, if we were to assume the exchange rate didn’t change? Obviously, that’s impacting revenues a lot.

If we were to assume that doesn’t change, how should we think about the ability for this segment to grow or not next year?.

Noah, at this point I don’t see a 2016 much better than 2015. So 2015 is a year of adjustment. So, of course we work hard, as everybody else, in this adjustment effort. At this stage, of course, without knowing what is the planned budget for next year, it would be just guessing. Flattish probably would be a nice guess at this stage.

But, again, as we go towards the end of the year, we’ll be able to have a more educated guess as we see the budget proposal to be sent to Congress by the end of the year. Having said that, we are also working on the export side. So, we have several campaigns going on for the Super Tucano.

We have not, despite this little reprogramming on the KC-390 - which, by the way, it has also, let’s say, a little bit of a positive for us in the sense of giving us a little bit of slack, which was a very aggressive share. But, the campaigns are still going on. So, the interest in the aircraft is there.

So, we are also working on the export side, so it’s not only Brazil’s defense budget..

Got it. Okay. Thanks very much..

Thank you..

Thank you. And your next question comes from Ron Epstein from Bank of America. Your line is now open. Please go ahead..

Hey, good morning guys..

Good morning..

On the defense side, in the quarter it looks like margins were down a lot, if you could just kind of walk through why that happened.

And then, it looks like the receivables from the Brazilian government were up almost BRL200 million, and how we should think about how you are thinking about those receivables being recovered as we go into next year?.

Yes, okay. So, I’m going to answer the receivables. Then we’ll talk about the margins. The receivables, they did go up. More precisely, Ron, I think it was something in the range of $90 million to $100 million. I mean, we have been reducing our costs and reducing the allocation of our resources to programs.

But, of course the speed is different, the speed of the payments - the reduction in payments and the speed that we do expense. But, we are absolutely adjusting, as we said last quarter, our allocation of resources not to finance the program any further.

Having said that, this outstanding balance that we have in accounts receivable, this is being - this part of this reprogramming of the - we are negotiating on that as we speak to, number one, reprogram and smooth out a little bit the development and fundamentally postponing a year in the beginning of the serialization of the program.

But also, these amendments shall reflect the costs associated to this reduction and the resumption in the absorption of this accounts receivable. So, not in 2015. We do not expect any reduction. We expect to keep it at that level. We do expect to start recovering that from 2016 on.

And Ron, in terms of the margins, as we indicated there, mostly it comes from the cost base revision that we had to do. Defense programs, typically they are a percent of a completion type of contract. And you have to do revisions, as we have in terms of margin impact. Because of the exchange variation, this had to be done.

It was about like $25 million this year, the FX impact on those programs. $20 million was before, actually. So, this is primarily the reason for the margins, which we understand is more in the second quarter. If we exclude that impact, it would be a positive margin.

So, that’s basically the explanation for the impact on margin that you saw there in the defense business..

Okay, great. And then, maybe one last question, if I may. How is the business jet business going for you guys, particularly in North America? We’ve heard some different commentary in the last week from different companies as they reported that biz jets are good, biz jets are bad.

It’s kind of all over the place, so I was just kind of curious how you guys see the end market now and, in particular, how it’s going for Embraer in the U.S.?.

Well, it seems to me, Ron, that it’s not good, not bad. It’s okay. It’s similar to what it has been the last several months. The U.S. remains strong, so we see activity in the US. We have been able to sell small size cabins, the 200 and the 300 and the 500s. We are getting lot of interest in 500s.

So, at this stage, clearly now at the end of the second quarter we are a little bit better than what we were last year comparing. That does not mean that the second half is going to be an easy semester, but we are a little bit better than we were a year ago. So, around the world, not much activity. South America is very weak.

China also has not recovered. The U.S. is where the activity is, and the rest of the world is not great. So, this is pretty much the picture that we have seen in the last several months..

Okay, great. Thank you so much..

Thank you..

Thank you. And your next question comes from Alexandre Falcao from HSBC. Your line is now open. Please go ahead..

Good morning. Just wanted to understand what’s the coming quarters regarding defense? You guys did a lot of adjustments. Are we going to see more of those going forward? We’re already sort of kitchen sink, everything that we should see in defense, the first question.

And the second question is, if you look at the new FX or the new FX assumptions, you actually didn’t change the actual guidance. It’s more of an FX thing. Is that a correct reading for the changing guidance? Thank you..

On defense, I mean, we believe that once - now that the reduction and the cuts in the budget have been defined, I mean, we sincerely would not expect any further reduction. So, I think there is a commitment from the government side to whatever level they have defined.

So, the only impact as far as activity, I think we are - from now we’ll be adjusted to this new ability of the customer to pay for that. The only thing which can impact margins further is a continued devaluation of the real. The real keeps going down, and significantly that can affect revenues. Again, we are factoring all the program accounting.

So, that will turn into potential headwinds in defense. But, that same effect is going to cause a positive effect on commercial jets and business jets where the real costs will be lower.

So, as far as the Company, I mean, we are pretty much, I think, hedged naturally for - and as Eduardo said, we are forecasting a BRL3.20 FX for the next semester, for the second half. It may be higher because it’s now at BRL3.30, BRL3.32.

But, again, that is - we believe, with this reduction in the guidance of defense by $300 million, we have some margins to accommodate. Even if was a little bit beyond BRL3.20, we’ll be okay.

The second part of the question was [indiscernible]?.

The same effect that is negative, if we are talking about the FX impact, this impact to the defense business, it has a positive impact in the other businesses. That’s why we kept the EBIT and EBITDA range, and that, with the lower revenues, has increased the projection for the margins. That’s basically how we assess this..

Okay. So, the devaluation in FX is net neutral for you in terms of margins. That’s the understanding here..

It’s positive in - and overall it’s positive for the Company. And that’s why we were able - even with a lower revenue in the Company now we can actually increase the margins. And this comes exactly from the devaluation, which affects positively our real costs in reais that we have in the Company..

And, excuse me, to make sure you understand, and we know this question was there because, in defense, when you do a revision on the cost on the percentage of completion contracts, you recognize that in one moment.

But, the benefit that we mentioned in the other business, they come with the manufacturing and going through the inventories and delivering the aircraft. So, there’s a timing maybe difference on the positive and the negative impact sometimes.

And just to complement, keep in mind that defense is about 20% of our overall business and 80% is the other two businesses. That’s also another element for you..

And if I may just clarify one thing.

Was KC the only program revised here, or Sisfron and the others were also impacted?.

That’s a good question, Alexandre. We have - on the Sisfron satellite, I will say the changes were negligible, so pretty much preserved. The satellite - the launching service is already hired for the second half of next year with Ariane.

So, at this stage a delay in the program will certainly delay the launch of the satellite, and Sisfron is moving on as well. The modernization programs, several - there will be a reduction in scope and also some reprogramming. But, those are minor programs, so the impact is not very material for us..

Thank you so much..

Thank you. And your next question comes from Myles Walton from Deutsche Bank. Your line is now open. Please go ahead..

Thanks, good morning. Fred, you made the comment that things in the executive aviation were a bit better than where you were a year ago. I just wanted to clarify if that was deliveries to date.

What about kind of your order uptake and intake, and maybe some color on book-to-bill in the quarter?.

Yes, I meant more looking forward, not backwards. So, I am not sure we’ll do - did we talk about - we really don’t, right? But, I mean, just to give you a qualitative answer, Myles, I mean, we are not - I mean, we still have to sell a few airplanes to meet our guidance for 2015.

So, it’s not that the skyline is already full, but that aspect is what I meant, that we feel a little bit better now than we felt about a year ago. So, in other words, what I am saying is that we feel comfortable about - at this stage about fulfilling our delivery guidance for both small cabin and large cabin.

There’s a lot of activity in the 500s, and that’s helping us towards that end..

Okay. And then, Fred, I know you don’t want to comment specifically on a specific customer in the regional jet category, but Republic is 20% of your annual E-Jet deliveries over the next few years and they’ve done through a couple of things right now.

As you read it, how do you evaluate that situation? Do you see any risk behind it? Is it kind of not going to encumber their ability or desire to take the 175 over the next few years?.

At this stages, Myles, we are not seeing change to our plan. The airplanes are contracted. Financing is in place. And so, at least me, I have not heard anything from the airline. And in the end, we are - at least as I speak for myself, I expect that common sense will prevail. And ultimately, we have to think that those airplanes are not speculative.

Those airplanes, they have a clear address. They’ll be flown by Republic’s partners. And so, they are in the fleet plans, not only Republic, the fleet plans of United and American and Alaska - not Alaska, and American.

And so, I mean, I think eventually a solution will come So, at this stage, we are not - this year, I think we have something between 10 and 15 deliveries still to go this year. Most of those airplanes are way down into production, so I do not anticipate any impact this year. Next year, you’re probably right.

We believe the transit plus [ph] airplanes will be delivered. So, unless there is a major problem with - which, again, I think common sense will prevail, we may have an impact. We don’t know now. But, what gives me really good comfort is that those airplanes, they are committed for the major airlines to replace older 56 seat jets.

And so, I think that that’s the underlying warranty that we have that this thing will happen..

Okay. Thanks, Fred..

Thank you..

Thank you. And your next question comes from Cai von Rumohr from Cowen and Company. Your line is now open. Please go ahead..

Yes, thank you very much.

So, could you give us - tell us where your operating margin for commercial aviation and executive jets was in the second quarter and approximately where you expect it to be for the year?.

Hello, Cai. Yes, sure. Commercial jets, we achieved 12.8% of operating margin. Business jets was 6.5%. And of course the defense, which is what brought us down, because we registered a minus 20.3% in the defense business.

So, for the year, what we will see is probably the commercial jets helping us on the upper side to keep this 8.5% to 9% range; business jets improving because they have much more volume in the second semester than in the first.

And defense, we hope to be significantly better because the major impact of both the reduction in revenues and the FX chart move we already captured in the first half. So, that’s more or less the logic going forward..

So, shouldn’t you see a good uptick with the greater volume in biz jets and the fact that you have a more favorable real and the fact that you have kind of an inventory flow through delay? Shouldn’t we see a nice lift, particularly in both of those commercial businesses sequentially as we go?.

On commercial jets, maybe not so much because we had a relatively good mix in the first half. We had some good deliveries as far as margins in the first half. So, on the business jets, yes, we’ve seen - nice is a very subjective way to say it, but some upside, yes.

We had indicated towards the end of the year that when we did the guidance six months ago, we said, well, everybody should be around that same average of 8%, 8.5% [ph] plus or minus 1%, 1.5%. So, what we see now is that commercial jets will be on the upper side, probably beyond the company average.

Commercial jets will be coming pretty close to the Company’s guidance and defense will be a detrimental factor to that consolidated figure..

Got it. And then, so if I look at your defense revenue revision, it’s about 30% and it looks like FX is maybe half of that, so that there was some flip even on a constant currency basis.

Can you tell us, in terms of your program adjustment, how much of that was execution related versus currency related?.

I think you’ve got it right, Cai. I don’t have the precise numbers here, but it’s probably something like 50-50. So, 50% of it probably is currency. 50% probably is activity..

Got it. And while next year is a long way away, certainly the margin profile of the FX tailwind really helps you in the second half with both of your commercial businesses. Assuming the real the stable, we should get some nice carryover next year.

And because you mark-to-market immediately on the government side, I mean barring further execution issues, shouldn’t - the defense number, which looks like it’s going to be modest at best this year, should be a better number next year. So, all of this bodes fairly well for next year.

Is that a reasonable thought?.

Yes, I think it is a reasonable thought. Of course, with the benefit of six more months, we will be able to confirm or not, or partially confirm, that line of thought. But, the solidness of - we are - the skyline on the commercial jets is very, very strong for next year.

As far as when I say very strong, very strong towards maintaining the current levels that we have today. So, we have been saying consistently that we see a stable outflow in the next several years until the E2 comes into the market. So, we are strongly well positioned towards that end. Business jets is a continuous challenge.

But, again, we have a new product which has received a tremendous acceptance in the market. That’s the Legacy 500. And defense, yes, of course we’re going to adjust our cost base. We do not expect the real to keep - this year it’s devaluated 50%, so this can’t keep going like this forever. So, that may result in a better picture.

But, of course, as you said, Cai, you have to - we have to wait some more time to be able to put some - to nail that to numbers..

Thank you very much..

Thank you. And your next question comes from Turan Quettawala Scotiabank. Your line is now open. Please go ahead..

Hey, good morning.

I’m sorry if I missed that, but could you provide a clean defense margin? Was it - did you say it was a $25 million kind of revision in this quarter?.

That’s right. Yes, correct..

Okay. And then this is in addition to the $30 million that you had last quarter.

Is that right?.

Yes, correct..

Okay. And I’m sorry if I’m repeating stuff here, but did you - and I guess it should have - now this pretty much flushed through.

Assuming the real stays constant, is that the right way to think about this?.

Yes, it shouldn’t have an impact. If the real remains at the level that we used for the revaluation of the contract as we did, it shouldn’t impact. Of course, this is something that we have still to, for example, use as we mentioned, the BRL3.20, which is very close to the market today.

So, at this level - a little bit higher today, but at this level we should expect no further impact coming from this type of revision in terms of the contract..

Great. And I guess, Fred, maybe one more question in terms of the defense business.

Do you think there’s a risk that the government sort of starts to use your balance sheet to develop the KC-390?.

Well, not beyond what has already been used. We are carrying some $300 million, $370 million in accounts receivable. And, I mean, this is it.

So, we are - part of our amendment discussions in the several different programs, but in particular in the KC-390, which is by far the largest program that we have, is the reprogramming of both development and the serialization and the recovery of those accounts receivables, and of course the cost of the impact of those reprogrammings.

So, I don’t expect - I do not expect 2016 to be much better than 2015. What we do not expect is new surprises like what we had this year..

Okay, great. And, I mean, the commercial margin is really strong here, obviously.

Is there really room to raise that next year? It seems unlikely though, right, that this - considering it’s so high already?.

So, it’s much more market driven than industrially driven. So, at this stage we feel good about saying that we will not reduce the level of activity and the quality of our revenues and results; probably too premature to talk about upside. But, if the demand is there - there are several campaigns going on.

So, if the demand is there, we have the industrial capability to react. At this stage, I think it’s premature to assume that..

That’s very helpful. Thank you..

Thank you. And your next question comes from Felipe Yazbek from Verde Asset. Your line is now open. Please go ahead. Please check our mute button..

How many left?.

Thank you. And we will move to the next question. Our next question comes from George Ferguson from Bloomberg Intelligence. Your line is now open. Please go ahead..

Thank you, good morning. A question for you on the exposure to some of the oil related economies with business jets.

Can you help me understand the demand in those regions? Is it - do you have less exposure, given the typical size of your business jet, that you’re sort of more concentrated in the smaller and medium size, or was there a fair amount of demand in sort of Russia and Middle East for those kind of airplanes? And so, will continued weakness in oil prices have an effect on selling those airplanes?.

So, those are in markets which are important. We have important footprints in both Middle East and Russia. But, we had not expected strong demand from those regions in 2015 anyway. So, the answer is no, most of our demand is expected to come from the United States, so no worse impact than what has already been planned..

Got it. Okay. And one more question on sort of the currency effect, although you do say most of its U.S. And so clearly, when you’re a U.S. buyer buying biz jet in dollars, there’s no issue with currency.

But, in some of the other currencies that have weakened, how much of an effect - or can you give me a sense for the overall effect on a biz jet sale when a soft local currency has to be converted into dollars to buy the airplane? I mean, you get a benefit from real weakness, but isn’t it more painful for the customer to buy the airplane because of the weakness in their local currency?.

You mean to a customer located in Brazil or abroad?.

Brazil or Russia, right? So, if you were buying an airplane in dollars and you had to convert 60 rubles to a dollar, which is today, compared to 30 a year ago - doesn’t that create softness? Go ahead, sorry..

Yes, yes, it does. And again, it’s already priced in, in the sense that our planning, we did not expect - we did plan for a much lower demand in those markets because of several factors, including devaluation of the currency. The airline - I mean the business jets and the industry is totally denominated in U.S. dollars around the world.

So, yes, it is more difficult for Brazilians, for Russians, for other developing country customers to buy. They became more - but I think that those customers, they never think about their local currency anyway. They think about dollars. So, what has happened is that their ability to have those dollars has diminished..

Okay. Thank you..

Thank you. And your next question comes from Peter Skibitski from Drexel Hamilton. Your line is now open. Please go ahead. Please check our mute button..

Good morning guys. I apologize if some of these were asked. I got on a little bit late. But, on the KC-390 delay, you’re going to be in testing for a few years now.

Should we think that revenue from the KC-390 is sort of on a downward glide path the next few years, or is it more stable because of the percentage of completion?.

I think that’s the way to put it. What I would think would be a shift to the right of a year. So, we are fundamentally pushing everything about a year to the right. I think that’s the best way to think about it..

Okay.

So, revenue decline is because it’s the same revenue shifted over a longer time period?.

Yes. Well, let’s separate. We have the revenue coming from the development contracts, which would end by the end of next year. Now it’s going to be another year, so there would be of course reprogramming there.

But, as we have said, the real stream of revenue coming from the aircraft in production, which was planned to start in the first half of 2017, now is first half of 2018. So, that is the year that I mentioned that we should - this is a shift right of about 12 months as far as the whole, let’s say, production aircraft or cash flow..

Okay, I think I understand now.

And then, when do you guys expect the second phase of Sisfron to be awarded?.

It’s hard to tell at this stage. Probably not this year, and maybe next year would be the good guess. But, as you may imagine, things are a little bit fuzzy here as far as what’s next on the budget for the Brazilian government..

Okay, understood. And then, just last question.

Is the 450 on track to deliver in the fourth quarter?.

Absolutely, absolutely on track..

Got it. Thank you so much..

Thank you..

Thank you. And we have a follow-up from Noah Poponak from Goldman Sachs. Your line is now open. Please go ahead..

Fred, you sound pretty positive when talking about your effort to sell the new Legacies out of the executive segment. I’m just wondering if you could maybe talk about that a little more.

Is there strength, new strength in that segment of the market, or do you feel like you’re doing better than your competitors that also have new aircraft in that segment of the market? And if it is that, can you maybe talk about which specifications you have in the aircraft that - in particular that customer really like?.

Sure, Noah. So, you got the first and the last questions, so that’s a full circle. No, it is - no, we are - and thanks for the question, because that helps to clarify this, that my optimism comes from the product itself.

The 500 is indeed, I mean without no arrogance, but the most modern airplane out there in the business jet arena, especially in the mid carrier [ph] arena. So, going forward - and then, in the specifications, the features, they are comfort, silence.

This fly-by-wire has tangible benefits for the passengers such as comfort, such as less - a better way to handle turbulence. And just the fact that it’s something which is state of the art technology, this of course also has an appeal with that kind of a sophisticated customer.

We have broken ground of the expansion of our facility in Melbourne for the 450 and 500. So, we are producing those airplanes now in Sao Jose dos Campos, but the end of next year on we’ll have the second line in Melbourne. So, we are optimistic about those two products. And remember the 450 will join its brother, its sibling, by the end of this year..

Okay.

And what’s the new blended interest expense rate we should be using, and rate on cash for interest income we should be using on the P&L?.

Just a second. They’re going through the numbers..

Okay. We have - in terms of the real cost, it’s from 6.12% to 6.24% of interest in loans here. And in terms of dollars, it declined from 5.56% to 5.25%..

And, sorry, what is that referring to?.

This is the dollar denominated debt..

Sort of a causing [ph] debt, this is right?.

Yes. So, my question is….

The blended rate in the debt, U.S. dollar related, comes from 5.56% down to 5.25%. And the indebtedness denominated in reais goes from 6.12% to 6.24%..

Okay..

Did that answer your question?.

I think so, but I’ll take a look and follow-up if it doesn’t..

Yes, please do the calculation, and then Eduardo can check with you to make sure that’s what you want..

Okay. Thanks a lot..

Thank you, Noah..

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