In the evolution of its business jet product line, Embraer (Booth 5233) is said to be considering aircraft both larger and smaller than the ERJ 135-based Legacy. But Marco Tulio Pellegrini, the company's market intelligence senior manager for corporate aircraft, says it's too soon to decide which way to go. "Embraer is committed to being in the corporate aircraft business," says Pellegrini, "but we have made no decisions yet on future offerings."
The company's independent market projections show potential on
both sides of the large/super-midsize category, the sweet spot where
Embraer is marketing the Legacy. Between 2005 and 2014, the company
projects 5,130 business jet deliveries around the globe, with 30%
of those (40% of the total revenue) in the large and super-midsize
categories. Ultra-long-range jets like the G550 and Global Express
are expected to account for 9% of the deliveries (22% by revenue)
in the Embraer model, while all smaller sizes will account for 57%
of deliveries but only 27% of revenue. Global entrants, the BBJ
and ACJ, are expected to account for 2% of sales and 6% of revenue.
As of late September, Embraer had delivered 39 Legacys to owners
in 11 countries, including several foreign governments, and planned
to continue a production rate of 1.5 aircraft per month through
2005. Scott Kalister, vp of corporate aircraft sales would not divulge
the number of aircraft in the queue, but did say that there's a
nine-month lead-time to purchase a new aircraft, driven by the interior
completion.
While the forecast results are encouraging, Embraer's experience
with the Legacy shows that it can be an uphill battle for the new
kid on the block to catch the eye of traditional corporate flight
departments (CFDs). In a survey of 700 of the 4,000 or so CFDs in
the business, Pellegrini says there were no "bad comments" about
the Legacy, just that people didn't know much about it. The anonymity
has fueled Embraer's efforts to take the aircraft on the road and
show it off.
Often too, CFDs will stick with their tried and true manufacturers
regardless of whether the Legacy, at $21.5 million completely equipped,
can offer equivalent performance for millions less. "The price is
attractive to guys that are making their own decisions, like entrepreneurs,"
says Kalister. "They see value in our price point. The challenge
for us is corporate flight departments with a long approval chain,
where decisions can be challenged up the ladder."
Embraer is working on the assumption that the CFD barriers will
fall however. Pellegrini says the company will introduce another
model in the "medium to short timeframe," but he wouldn't elaborate
other than to say there would not be an announcement on a new product
at the show. Pellegrini says there are roughly 100 engineers out
of 4,000 engineers company-wide dedicated to corporate aircraft
concepts, including a corporate 170/190. At the management level,
he says, Embraer is "evaluating precisely how and when to invest
and apply resources to a new product."
