Profit Hunting

Embraer sees a robust commercial market, as Nigel Pittaway explains

Brazil’s Embraer was at the 52nd Paris International Air Show, held at Le Bourget between June 19 and 25, in force. The company conducted daily flying demonstrations with both its KC-390 military airlifter and new E195-E2 airliner.

In addition, the commercial division of the company announced deals for 51 aircraft, worth $3 billion, at the show. Although most of the orders were for its first-generation series of aircraft, ten E195- E2s were sold to an undisclosed customer, which also took purchase rights on ten E190-E2 aircraft and another undisclosed customer signed a commitment for 20 E190-E2s.

Testing of the E-Jets E2 family also continues apace with the entry into service of the first variant, the E190-E2, on track to occur next year.

Market Outlook

To date, total orders for Embraer’s E-Jet family (both the original E-series and the next generation E-Jets E2) stand at 1,749 units. Of this total 1,317 have been delivered, leaving a backlog of 432 aircraft.

Altogether the worldwide fleet has amassed over 20 million flight hours and the Brazilian manufacturer claims a reliability of 99.92%. Embraer also claims to have secured 61% of the 70-130 seat market, with its main competitor Bombardier holding just 31%.

Beyond the orders announced at Paris and looking to the future market outlook, Embraer Commercial President and Chief Executive Officer John Slattery predicted a requirement for 6,400 aircraft in the segment between 2017 and 2036, with North America (2,200), Europe (1,150) and the Asia Pacific region (1,710 aircraft) taking the lion’s share.

Latest Orders

Orders for the first generation of E-Jets have undergone a resurgence in recent times and the majority of the orders announced at Le-Bourget were for this family of aircraft. Production of the original E-Jets is currently planned to continue until at least 2020 and Embraer says that if customers continue to order them, it will extend production accordingly.

The company says it is not concerned that the first generation aircraft are outselling the new E2 family at the moment; Slattery notes that order activity for a new aircraft typically ramps up a year before it enters service and this is the position Embraer is in now with entry into service for the E190-E2 set to occur in the first half of 2018. The second member of the family, the E195-E2, will follow approximately one year later and the E175-E2 will be the last family member to enter service in 2021.

The E195-E2 at the show was resplendent with an eagle painted across the nose, a reference to Embraer calling the E-Jet the ‘Profit Hunter’.
The prototype E195-E2 PR-ZIJ (c/n 1902005) during the flying display at Paris, an event during which Embraer announced orders for 51 of its E-Jet family aircraft.
All photos Michael Kelly

The latest E2 announcements at Le Bourget bring the order book to 285 aircraft, with options for a further 445. Together with purchase rights and letters of intent, the company says it has a total of 730 commitments from airlines and leasing companies.

The E2 orders announced at the show were from two undisclosed customers, the first of which ordered ten E195-E2s, valued at $666 million at 2017 list prices; and took purchase rights on a similar number of E195-E2s.

Another undisclosed customer has signed a commitment to purchase 20 E190-E2s, which is subject to final negotiations but valued at $1.182 billion.

Moving to the first generation of aircraft, Fuji Dream Airlines (FDA) has placed a firm order for three E175s and taken out purchase rights on a further three in a deal estimated to be worth $274 million at 2017 list prices.

The aircraft will be delivered in a singleclass configuration with 84 seats. FDA took delivery of its first E170 in 2009 and currently operates an 11-strong fleet, comprising three E170s and eight E175s.

Belavia Belarusian Airlines has also placed a firm order for two aircraft, one E175 and one E195, for delivery in 2018. Valued at $99.1 million, the contract will see Belavia’s E-Jet fleet grow to six aircraft, comprising three E175s and three E195s.

One of the major operators of the E-Jet is KLM Cityhopper, which is replacing its fleet of Fokker 70 and Fokker 100 aircraft with E175s and E190s. At Le Bourget, it was announced that the airline has placed a $101 million firm order for two more E190s, bringing its fleet to 39 aircraft, made up of 30 E190s and nine E175s. The new aircraft will be delivered in 2018 and when the fleet recapitalisation is complete, KLM Cityhopper will have the largest E-Jet fleet in Europe, with 49 aircraft.

The final announcement at the show was for an additional E190 for Japan Airlines, for its subsidiary J-Air. The firm order has a value of $50.6 million. The aircraft will be delivered in a two-class configuration with a total of 95 seats.

The announcement marks the first anniversary of the first revenue flight of a J-Air E190 and the airline currently operates a fleet of 24 E-Jets, made up of 17 E170s and seven E190s, with an additional aircraft on back-log.

E2 Flight Test Programme Update

Embraer also used the Paris show to provide a briefing on its E2 flight test programme, which currently has four E190s flying from the company’s dedicated test facility at Gavião Peixoto.

Altogether the fleet has amassed a total of 1,020 flight test hours, complemented by a further 2,950 hours of ground testing. An Embraer spokesman said there have been no major issues so far, giving the company confidence that the first member of the family will enter commercial service on schedule next year.

The first prototype E195 made its first flight from São José dos Campos on March 29 and the aircraft made its international debut at Paris, just over two months later, mimicking the appearance of the first prototype E190 at Farnborough last year.

The major difference between the two events however, is that the E190 only appeared in the static display at Farnborough, whereas the E190 flew in the daily flight display at Le Bourget. Embraer refers to the E2 series as the ‘Profit Hunter’ and the first E195-E2, PR-ZIJ (c/n 1902005), arrived at the show resplendent with an eagle painted across the nose.

Referring to the robust market forecast, Slattery says that Embraer is seeing increased confidence from airlines to engage in serious discussions about fleet recapitalisation or expansion. “We haven’t seen that over the last two years or so, ” he commented.