Paris 2011: Embraer Sees Strong 20-year Market, but Remains Noncommital on Entry on Narrowbody Airliner Segment

Paris Air Show » 2011
June 21, 2011, 2:03 AM

Embraer yesterday bypassed an opportunity to firm up its intentions in the widening campaign to challenge the dominance of Boeing and Airbus in the single-aisle airliner sector. But the Brazilian airframer also passed a major milestone here in Paris with announcements of 37 orders and options that will take total orders for the E-Jet family over the 1,000-aircraft mark.

“We need more time to understand the [market] landscape,” said Embraer commercial aviation president Paulo César, who added that launching a new single-aisle aircraft in the 130- to 150-seat market is a tough decision, and that Embraer still might decide not to enter that market at all. And even if a decision to launch is made by the end of this year or in early 2012, an entry into service could not be expected before 2018.

As for the question of whether Embraer might enter the market with an enlarged version of its popular E-Jet, César seemed to discard that notion. “To enlarge the E-Jet would compromise the aircraft,” he stated emphatically.

Discussing production, César said Embraer continues to build its E-Jet at its São José dos Campos location and has no plans to locate production elsewhere.

The new orders announced here at include two E190s and options for two more from Air Astana, valued at $85.6 million; 20 E190s from Sriwijaya Air, valued at $856 million; and two E190s from GECAS with a value of about $43 million. An order for 10 E190s and 10 options from Kenya Airways is a letter of intent, but, with a smile, César nonetheless described it as a “firm” letter of intent.

Embraer has also released a revised market outlook for aircraft in the 30- to 120-seat segment that assumes a continued global economic recovery, which it says is proving stronger than expected. The company’s forecast reflects that recovery “measured by revenue passenger kilometers [RPK], increasing at an average annual rate of 5.2 percent and reaching 13 trillion RPKs in 2030.”

The forecast also defines China as the fastest growing market over the next two decades with an average annual RPK rate of 7.5 percent, followed by Latin America with 7.2 percent, the Middle East with 6.9 percent, Asia/Pacific with 6.1 percent, the Commonwealth of Independent States (CIS) with 5.9 percent and Africa with 5.4 percent.

The more developed economies of North America and Europe will see lower demand “due to market maturity and slower economic recovery,” at 3.5 percent and 4.4 percent respectively.

Embraer foresees world demand for 7,225 new jet deliveries in the 30- to 120-seat category over the next 20 years, with a market value in the $320 billion range. Of this total, 3,125 aircraft are projected for delivery between 2011 and 2020, and the remaining units between 2021 and 2030.

While the 50-seat market has been affected by high fuel prices and a low-yield environment, the forecast said these aircraft are still essential to feed hubs in the U.S. and will progressively help develop regional aviation in other regions such as Africa, the CIS and Latin America.

In the 61- to 120-seat segment, much-needed flexibility and efficiency improvements have benefited the airlines by right-sizing larger jets, replacing aging aircraft, developing new markets and expanding from smaller regional jets.

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