Brazilian manufacturer Embraer has delayed the planned first deliveries of its KC-390 airlifter/tanker by two years to 2018, citing a slowdown in defense spending. Announcing its second- quarter financial results on July 30, Embraer reduced the revenue outlook of its defense and security segment, saying it expects to receive $300 million less this year due to devaluation of the Brazilian real and government spending cuts.

Embraer earlier expected to certify and deliver the first twin-engine KC-390s to the Brazilian Air Force in 2016. It now says the aircraft’s flight-test phase will begin in the third quarter this year, and last 18 to 24 months. The manufacturer expects to certify the KC-390 in the second half of 2017 and begin deliveries the next year.

In a conference call with analysts, CEO Frederico Curado described the postponement as a “reprogramming of both development and serialization,” of the new aircraft type, which will replace Brazil’s Lockheed Martin C-130s. He predicted no further defense reductions, saying the extent of Brazil’s current recession and budget cuts have been defined.

Embraer signed a production contract with the Brazilian Air Force in May 2014 to deliver 28 KC-390s. Five other countries—Argentina, Chile, Colombia, Czech Republic and Portugal—have committed to buying 32 more aircraft. The manufacturer rolled out a prototype KC-390 at Gaviao Peixoto in Brazil last October. It said the first flight of the aircraft took place on February 3, and lasted one hour and 25 minutes.