Paris Air Show

Paris 2011: Embraer carefully considers its narrowbody options

 - June 19, 2011, 6:15 AM

Embraer will wait as late as year-end for Boeing to decide on a plan for a 737 replacement before the Brazilian company commits to a successor for its own E-Jet family of aircraft, Embraer executive vice president for the airline market Paulo Cesar de Souza e Silva told AIN in an interview ahead of this week’s Paris Air Show. Still, Embraer already knows what it will not do–namely, follow Bombardier into a size and range category that, in de Souza’s estimation, the Airbus A320neo also occupies.

            “We believe the C Series proposition, in terms of range, is too much,” said de Souza. “Airlines won’t pay for something they will not use.”

            At 3,400 nautical miles, the range of the Bombardier CS300 also places it in a weight category that too closely approaches that of the A320neo, said de Souza. Now studying an airplane in the 130- to 150-seat capacity category, Embraer would distinguish its product largely by offering a less range-capable but lighter airplane. “I think the sweet spot is about 2,400 nautical miles,” said the Embraer executive. “Some 95 percent of the narrowbody flying in the world is within 1,800 nautical miles.”

            De Souza said Embraer’s options have now boiled down to whether it introduces a relatively lightweight 130- to 150-seat jet or re-engines the current 70- to 120-seat E-Jet line. The company now appears “unmotivated” by the prospect of a new turboprop given the relatively small size of the market and the foothold ATR and Bombardier have achieved in the segment. However, Embraer CEO Frederico Curado on several occasions has expressed distaste for a re-engining the E-Jets, repeatedly referring to them as modern, state-of-the-art aircraft that continue to draw respectable sales interest. Furthermore, as de Souza noted, Embraer’s growth in the commercial airliner segment won’t come from the segment of the market it already serves.

            “If we want to grow the company, we definitely will have to move upward,” he said. “By changing the E-Jets we’re not changing the size of this market…And we continue to have the view that the E-Jet is a modern product with up-to-date [systems]…But, of course, we have to look ahead. I’m not saying that we would necessarily re-engine the E-Jets now, but we are looking into that, making our assessments whether or not we should do it and when we should do it.”

            In fact, Embraer appears to favor waiting until the end of the decade to re-engine the E-Jets, after it introduces an all-new product in the 130- to 150-seat category. “In this case we would definitely postpone [a re-engining project],” said de Souza.

            However, if Boeing doesn’t decide to concentrate its efforts on a slightly larger replacement for the current 737, Embraer’s case for entering the mainline narrowbody market could weaken considerably. “If Boeing does decide and make an announcement this year, as they say they will, that they will develop a larger narrowbody, this is very important information to us,” said de Souza. “Because in this scenario, Boeing will not develop a brand-new aircraft in the category of, lets say, 130, 140 or 150 seats.”

            Although Boeing continues to entertain the option of re-engining the 737, that company’s CEO, Jim McNerney, has signaled that “the bias” remains on an all-new airplane by 2019 or 2020 and, unlike Airbus COO for customers John Leahy, Embraer executives appear prepared to believe the Boeing boss. “This is an unlikely scenario I think,” said de Souza of a 737 re-engining project. “There is a lot they have to do to re-engine the 737, not like Airbus.” Namely, the 737’s nacelles do not offer enough ground clearance to accommodate the larger fans on the new engines under development.

            Of course, the availability of resources–human as well as financial–could also play a key part in any decision Embraer makes. Unlike in China, which produces 380,000 engineers a year, technical talent in Brazil remains scarce, said de Souza, who mentioned Turkey and India as fertile recruiting grounds. Meanwhile, from a financial perspective, Embraer simply cannot afford a colossal misjudgment; hence, the reason for what some might consider signs of reticence.

            “This is a major project for us given our size,” said de Souza. “So we can’t afford to make a mistake here.”