Embraer Talks Executive Jets at EAA AirVenture

AIN News Live » EAA AirVenture » 2013
August 4, 2013, 7:45 PM

Embraer counts the annual EAA AirVenture Oshkosh show as a key element in its business aviation strategy, especially for the light Phenom 100 and 300 jets, many of which are owner-flown. The Brazilian manufacturer brought examples of each jet to this year’s show, as well as a Super Tucano light-attack turboprop single that participated in the afternoon flight demo with famed aviator Patty Wagstaff at the controls. “We continue to support EAA and its work with the Young Eagles program and view AirVenture as an ideal venue to display our aircraft,” said Embraer Executive Jets vice president of sales for North America Robert Knebel.

“We said in 2005 when we launched the Phenom programs that we’d be a major player in business aviation by 2015,” noted Embraer Executive Jets president Ernie Edwards. “Arguably, we’ve achieved that.” In the second quarter, Embraer delivered 29 jets, 23 of which were Phenoms (11 Phenom 100s and 12 Phenom 300s).

Both Phenoms are now assembled at Embraer’s two-year-old Melbourne, Fla. facility from components shipped from Brazil. Two hundred people currently work at the Melbourne campus, which includes a two-bay paint shop, customer center, interior design shop and sales offices. A 67,000-sq-ft engineering interior excellence center for new product development and modifications packages is under construction and will open by the end of next year. Twenty-seven people work in an interim engineering facility now, and that number is expected to grow to 30 to 35 by the end of the year.

Edwards is encouraged to see that the business jet fleet has grown 2.8 percent year-over-year to 19,156 aircraft. At just 307 aircraft, the fleet in China is just 2 percent of the total, but, he said, “The growth [there] is amazing.

“The market recovery we’re all hoping and praying for will come, but depends on many factors,” he continued. Chief among these is the willingness of financial institutions to lend money for aircraft and also the need for the number of late-model used airplanes for sale to shrink. “People are slowly coming out of hibernation,” he said. “And financing appears to be getting better. There are still strict credit requirements, especially for entry-level light jets, but we’re seeing new entrants coming into the finance world.” One such company is People’s Capital and Leasing of Lakeville, Minn., whose v-p of sales Joe Krolak was in attendance at Edwards’s Oshkosh presentation. Krolak told AIN that his company is actively targeting qualified customers who are prospective buyers of Embraer’s light jet products.

World gross domestic product remains marginal at 2.9 percent, and Edwards said, “I’d like to see it higher.” Nevertheless, the number of high-net-worth individuals worldwide (defined as having quick access to one million dollars in liquid cash) has grown to more than 12 million, although most are in Asia and China where operating business aircraft is logistically more challenging and where buyers tend to favor larger jets. In Europe, Edwards said, “We are beginning to see signs of recovery.” And while 2013 U.S. corporate profits are expected to dip slightly compared to 2012, “everything is pointed in the right direction.”

In Embraer’s annual market forecast, three outcomes are examined–optimistic, pessimistic and middle ground. In the worst case, Embraer sees deliveries of 8,350 business jets worth $218 billion from 2014 through 2023, Edwards said, “which is more than the last 10 years.” The optimistic outcome is 9,250 jets worth $250 billion.

On its current programs, Edwards said the new fly-by-wire Legacy 500 is on track for entry into service in the first half of next year, followed a year later by the Legacy 450. More than 14,700 systems test hours have been flown in the Legacy 500 iron bird test rig, and the flight test program has logged more than 450 hours, which is 45 percent of the planned total.

The chart showing the market share information includes a blank spot for an ultra-long range jet, about which Edwards said, “We reserve a slot for an ultra-long range jet if and when we announce one.”

In the markets in which it competes, the Legacy 600 has 15-percent market share, down from a peak of 18 percent. The Lineage 1000 is nearly 20 percent. The Phenom 100 is just under 40 percent and the Phenom 300 is at 23 percent. “The Legacy 650 is gaining steam,” he said, “at 12 to 13 percent.”

The recently certified Prodigy Touch flight deck in the Phenom 300 (Garmin G3000, with touchscreen controllers) will be available as an option for any Phenom 300 buyer by the end of the year. The price for the optional upgrade should be in the $350,000 to $400,000 range. The flight deck was launched by an order for 125 Phenom 300s by NetJets. First delivery of the updated Phenom 300 to NetJets took place in April. Embraer also plans to offer the Prodigy Touch system as a retrofit for Phenom 300 owners, but has no plans to do so for the Phenom 100.

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