Embraer and the narrowbody market

Bloomberg is reporting that Embraer could challenge Airbus and Boeing in the single-aisle airliner market, but not before the middle of next decade. It quotes new chief executive Fred Curado as saying it would take new engine technology and “a huge change” in the dynamics of the market, but he does not rule a new large Embraer airliner.

Engine technology is clearly the key to what happens next in this market. Airbus and Boeing are edging back their next-generation narrowbodies to around 2015 to capture as much new technology as possible, and Bombardier’s repeated failures to launch the CSeries have positioned the 110/130-seater to be first to benefit from new ultra-high-bypass engines – if it gets the go-ahead next year for entry into service in 2013.

Is Embraer leaving it too late?

Embraer’s E-Jets: as big as it gets – for nowProbably not. By looking to 2015-2016, it is letting its rivals do the hard working of pushing engine manufacturers to come up with more efficient, more environmental powerplants. In fact. Bombardier may face the toughest challenge – trying to get a new engine by 2013 when Airbus and Boeing are prepared to wait another couple of years.

What Embraer has to balance is engineering resources and customer expectations. Development of the E-Jets is complete, but engineering has moved on to the Phenom light jets. Next comes the C-395 tactical airlifter and another all-new business jet, maybe two. It will be a few years before Embraer has the resources to design a new airliner.

Also the 70- to 120-seat E-Jet family is still relatively new in service, and while Embraer may need to be ready with a larger airliner when its customers outgrow the aircraft, as they did the 50-seat ERJ-145, that is still a few years away.

The questions are whether the market can support four competitors (plus the Chinese and the Russians) and whether Airbus and Boeing will let the others in. There has been speculation in the past about Bombardier and Embraer aligning with Airbus and Boeing, in some combination, to close the gap between their product lines and customer bases. Maybe we will hear it again.


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