June 19, 2013
Diversification into business aviation and defense will let Embraer grow without forcing the company into direct competition with Airbus and Boeing, says President and CEO Frederico Fleury Curado.
“The fact that defense can grow to be a solid business...and business aviation to be another important pillar is embedded in our decision not to try to engage in larger commercial aircraft,” he tells Aviation Week in an interview after the company launched its next-generation E-Jet E2.
Although two of the new three-aircraft E2 family are larger than Embraer’s current E-Jets, they stay below the markets served by the A320NEO and 737MAX, offering 88- to 132-seat capacity.
“Diversification is a need for us,” Curado says. “I don’t see either [defense or business aviation] being larger than commercial aircraft, at least on the visible horizon, but they can be important enough. They are both now above $1 billion businesses.”
When it comes to moving up in the business aviation market, “the thought process is similar to engaging in larger commercial aircraft,” he says. “Can we or can we not offer something game-changing that will move customers from Gulfstream, which we see as the benchmark?
“We have to bring something different, something special. The question of whether we can do something like that is a little bit ahead in the future. Certainly that is something we keep looking at, but so far we are comfortable with where we have invested, and that our portfolio from the Phenom 100 to the Legacy 650 gives us a reasonable footprint in the market.”
On defense, Curado says that development of the KC-390 tanker/transport for the Brazilian air force is 20-25% complete and “pretty much on time and budget. First flight is planned towards the end of next year. So next year we will sit down with the air force and talk serialization. That will set the price and give us a basis to approach other customers and begin our commercial efforts.”
Embraer won the competition to lead the first phase of Brazil’s Sisfron border surveillance program. “We need to make sure we win the next ones,” he says. Sisfron could also create opportunities for Embraer’s Harpia unmanned aircraft joint venture with Israel’s Elbit and Avibras of Brazil.
The SisGAAz coastal-surveillance program is still in definition, ”but in Brazil, Embraer is the company with the most C4I capability. There will be some sort of requirement for Brazilian content, but we cannot take it for granted. We have to compete and win as we did on Sisfron.”