Aircraft demand seems to be perking up around the world, and that's good news in places like Montreal, Chicago, Brazil, and France. While Boeing (NYSE:BA) and Airbus continue to bash each other on the head for market share in large planes, Canada's Bombardier and Brazil's Empresa Brasileira de Aeronautica (known as "Embraer'") (NYSE:ERJ) square off for the regional jet market.

While second-quarter results for Embraer, a Motley Fool Stock Advisor recommendation, weren't exactly soaring, it does continue to seem as though the company is poised for good performance. According to the company's U.S. GAAP financial report, sales for the quarter fell about 12%, as the company delivered fewer aircraft in the quarter. Margins didn't fall off much, though, and the company squeaked by with a small increase in net income.

For the quarter, Embraer delivered 30 planes -- flat with the first quarter, but down from 43 planes in the year-ago period. The company was also hurt by the nearly 19% appreciation in the Brazilian real vs. the dollar; given that export revenue is about 90% of the company's total, that is a significant factor.

On a positive note, though, the company added about $1 billion in new orders, bringing the backlog up to nearly $11 billion. Not only is JetBlue (NASDAQ:JBLU) still a player in regional jet demand, but other international airlines (like Poland's and Saudi Arabia's) are buying Embraer regional jets as well.

As the civil aviation market picks up, competition should intensify. It seems to me, though, that Embraer is still being underestimated. Comments from Bombardier management suggest that they seem to regard Embraer with about as much respect as something stuck to the bottom of their shoes. That sort of attitude could play out favorably for the Brazilian upstart; the longer Bombardier underestimates it, the better for Embraer.

Of course, there are no sure things in the aerospace business. If the economy hits the skids and/or there is an aircraft-related terrorist event, that order book could dry up. What's more, Embraer is taking on some risks in trying to expand its business jet program, pitting itself against the likes of GeneralDynamic's (NYSE:GD) Gulfstream business.

All that said, I still see room to grow for Embraer, both the company and the stock. Brazil isn't always the most stable place to invest, though, so investors should realize the risks involved in a cyclical company with large competitors operating out of a sometimes economically volatile nation.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).