Image: Embraer.

In thinking about the aerospace industry, it's easy to focus on big-jet makers Boeing (NYSE:BA) and Airbus, which dominate the massive aircraft that draw the most attention among travelers. Yet the regional jet has gained in popularity over the past decade, and Embraer (NYSE:ERJ) has worked hard to take advantage of rising demand for its aircraft as well. Coming into its third-quarter earnings report, Embraer shareholders knew that the ongoing challenges of a weak Brazilian real would likely show up in the company's numbers, yet they hoped for signs of a better future for the company. That's largely what Embraer delivered, posting a net loss but pointing to rising aircraft deliveries and solid demand as indicators of brighter times to come. Let's take a closer look at how Embraer did in the third quarter and what it means for the jet-maker going forward.

Embraer faces dollar headwinds
Embraer's third-quarter results reflected the ongoing difficulties that a strong U.S. dollar has had on the company. Revenue rose 3.6% to $1.28 billion, which was far less than the $1.37 billion in sales that most investors were expecting to see. Embraer's bottom line also looked ugly, with the aircraft manufacturer posting a net loss of $109.6 million. Yet the 28% plunge in the value of the Brazilian real versus the dollar cost Embraer $24.2 million in foreign exchange losses and contributed substantially to the company's income-tax expenses doubling to $164.4 million. After accounting for extraordinary items, Embraer's adjusted earnings of $0.39 per share were a nickel per share higher than the consensus forecast among investors.

Interestingly, Embraer's segments had very different performance during the quarter. The executive jets division had by far the best performance, with revenue almost doubling to $402 million. By contrast, the defense and security segment suffered from the weak Brazilian currency and from revisions on the cost base on some of its contracts, and that send segment revenue down by nearly half to $181.7 million. In the middle was the key commercial aviation segment, which posted modest growth of about 4% to $688.2 million.

On the delivery front, Embraer has seen clear signs of improvement. During the quarter, Embraer delivered 21 commercial aircraft, most of which were E175 regional jets. That figure was up from 19 in the year-ago quarter. More impressively, the company delivered 30 executive jets, including 21 light jets and nine large jets, doubling its pace from the third quarter of 2014.

Can Embraer climb back into the sky?
From a longer-term perspective, Embraer's success depends on ongoing demand for its aircraft, and the company's order flow and backlog should give investors some encouragement on that front. During the quarter, Embraer got an order for 18 more E175 aircraft from SkyWest, showing continued customer commitment for existing Embraer aircraft even as the company moves forward with its expected rollout of the E2 series of regional jets within the next couple of years. The order helped keep Embraer's backlog at a high level of $22.8 billion despite the uptick in deliveries during the quarter.

Furthermore, Embraer is working hard to get through regulatory barriers and get new aircraft into the sky in key parts of the world. In August, Embraer got FAA certification for its Legacy 450 business jet, and it expects to put the model into service during the current quarter. Similar certifications in Brazil and the European Union for the Legacy 450 should help accelerate growth, and the first Legacy 500 delivery to the Mexican market occurred in August.

One key question is whether the trend toward smaller aircraft in the commercial sector will continue. Boeing has seen substantial interest not just in its key smaller-sized 737 aircraft but also in larger models that can fly longer intercontinental routes, and cheap fuel prices and more fuel-efficient designs have helped Boeing market these larger planes more successfully. Certainly, some routes don't need the capacity of a larger aircraft, but Embraer needs to stay aware of the changing dynamics in the industry and compete effectively against Boeing and Airbus to maintain its command of the smaller-jet market.

Embraer stock has reacted positively to its results, climbing almost 10% since its announcement. If the jet-maker can keep delivering on its promise to its customers, then shareholders should keep liking what they see from Embraer in the years ahead.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Embraer-Empresa Brasileira. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.