INDUSTRY PERSPECTIVE: Embraer
What motivated Embraer to announce in 2005 the formation of Embraer Executive Jets and expand with such energy into that market?
We moved into business aviation as a strategy for growth and diversification. We identified core competencies in our commercial aviation manufacturing that had a high degree of commonality and concluded that with the right focus and a dedicated team, we would be successful.
In just three years Embraer Executive Jets has launched no fewer than five new aircraft programs. What challenges has this presented?
We really had to create a new organization, bring in new people, and construct an executive aviation structure [as] the customer requirements and expectations are different from those of commercial aviation. One important challenge was to create a whole new team with the right culture and understanding of that market; to develop people processes, especially in sales, marketing and [product] support.
Brazil is being touted as one of the rapidly emerging business aircraft markets. How are Embraer’s products being received on its home turf?
Of the total of more than 800 combined orders for the Phenom 100 and Phenom 300, more than 100 are from Brazilian customers. With the Legacy 600, we have been equally successful. By the end of the year, we will have 15 Legacys flying in Brazil. That represents about 10 percent of the total of slightly more than 150 Legacys in service.
Embraer now has more than 20 orders for its Lineage 1000. How do those orders break down globally and how do you see demand for it in the long term?
The Middle East is the strongest market for the Lineage, but we also have customers worldwide–in Asia, Europe, Latin America, the United States. It has a huge cabin and the price point [$42.95 million] makes it a very attractive alternative to
the large-cabin business jets and narrowbody jets.
In appears that in 2008 roughly 70 percent of OEM aircraft sales will be to customers outside the U.S. Is this consistent with what Embraer is experiencing and how is it shaping the company’s strategy?
We are experiencing the same demographics. This year, sales to U.S. customers will represent maybe 30 percent of our total, maybe 40 percent. But I believe we are living in a unique moment with regard to the [financial] crisis in the United States. I believe that in two years the U.S. market will have recovered [and] it continues to be a very important market. On the other hand, other regions of the world are growing at faster rates [so] we are reinforcing our sales teams outside the U.S. and considering more service centers in emerging markets.
Last year, you announced Embraer’s intent to build an assembly plant with associated shops and customer services for the Phenom 100 and 300. What prompted this decision?
It was a strategic decision to have a regional base in the United States. We believe it is very important to be close to one of the most important markets in the world. It is not only an assembly center, but a center for interior design, marketing, cabin completion, exterior paint and aircraft delivery.