Quietly – Or Not – Embraer Has Become A 'Player'

By James R. Asker asker@aviationweek.com
Source: AWIN First
July 01, 2013
Credit: Embraer

When Brazilian airframer Embraer laid out a plan to fully expand into business aviation in 2005, the company had plans to become a “major player within 10” years. Eight years later, Ernest “Ernie” Edwards is pleased.

“We’re on target,” Edwards says at the company’s sparkling new customer center adjacent to the Melbourne, Fla., airport. Then, after a moment of reflection, he edits himself: “We’re a major player already, we think.”

Embraer actually entered into the market in 2002 with a variant of its EMB-135 regional jet – the Legacy 600. (Edwards was running Swift Aviation, the airplane’s launch customer, back then.) In 2008-10, there followed into customers’ hands the first Embraer-designed aircraft for the business jet market: the entry-level Phenom 100 and light Phenom 300. Embraer also added a regional-jet-derived “ultra-large,” the Lineage 1000, and the large new bizjet airframe, the Legacy 650.

Embraer has passed the 100 mark in deliveries of the Phenom 300, its best seller. Even the high-end Lineage 1000 has grown to 12 operators in seven countries.

All told, the Brazilian airframer sold more bizjets than Gulfstream last year. Gulfstream’s revenues are much higher, of course. But by Embraer’s analysis of General Aviation Manufacturers Association data, the new kid on the block had 7.3% of a $17.7 billion market in 2012. What’s especially significant, though, is that is up from just 4.6% in 2007.

“There’s enough customers out there for all of us,” says Edwards. Like so many in business aviation, Edwards is an inveterate optimist, despite the sector’s notorious boom-and-bust cycles.

Looking forward, he sees some softness in the European market; flying hours on the continent appear to be down a bit over last year, at least in the early part of this year. And, he acknowledges sales in the global bizav sector overall might decline this year and next year if nations in slow economic recovery slip back into crisis mode. But overall, he is betting on bizav’s slow recovery, with sales of new jets returning to 2008 peak levels in 2018.

Among the encouraging factors Edwards lists are U.S. corporate profits and the number of high-net-worth individuals at record levels, the healthy growth promise of Latin America and Asia/Pacific, particularly China, and a new normalcy for financing conditions.

In Europe, the Middle East and Africa (EMEA), Embraer forecasts a market of 2,180 to 2,700 aircraft over the next 10 years at a value of some $75 billion. There are some real bright spots. Poland’s economy never went into recession. Turkey had 9% GDP growth in 2010 and almost as high in 2011 and 2012. And, Edwards says, “Keep a close eye on Africa, because they’re going to pop eventually.”

Unfortunately, the biggest risk to the global business aviation industry’s “recovery in slow motion” that Embraer analysts foresee is also from Europe. The speed of the recovery overall will still be dictated by what remains the 800-lb. gorilla in the bizav market – the U.S. and Canada.