ANALYSIS: the Embraer 190 aircraft report

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As part of our monthly review of a commercial aircraft market, values and lease rates, Flightglobal examines the Embraer 190 model this month.

The Embraer 190 model continues to enjoy a solid market position despite increased competition on the horizon from the Mitsubishi MRJ, Bombardier's CSeries and the COMAC ARJ21 models.

The Embraer 190 is the most popular member of the E-Jet family, which addresses the 70- to 120-seat jet market.

The aircraft is a larger stretch of the 70-seat E-170 model, fitted with a new and larger wing. Like the other members of the E-Jet family, the E-190 has four main cabin doors and offers maximum cabin configuration flexibility with dual class, single class and high-density seating arrangement.

Capable of carrying 98 passengers more than 2,400 nautical miles, the E-190 has blurred the distinction between regional and longhaul jets.

The CF34-10E engine is controlled by a redundant Full Authority Digital Engine Control (FADEC) system, which optimises engine operation during all phases of flight, reducing fuel consumption and maintenance costs.

Another important feature of the E-170/190 family is the use of fly-by-wire technology for the flight control systems, similar to those deployed on advanced military aircraft and larger commercial jets.

JetBlue Airways was the launch customer for the E-190 with 101 orders and options for another 100 units in June 2003.

The E-190 performed its first flight in April 2004 and received Brazil's civil aviation regulator Centro Tecnico Aeroespacial type certification in August 2005.


At 31 December 2012, Embraer had recorded 560 commercial and VIP/business sales compared with 183 sales for the E-170 model, 163 sales for the E-175 variant and 111 sales for the E-195 model.

Embraer has delivered 452 commercial aircraft to customers since 2005. In line with other members of the E-Jet family, the E-190 is offered in three variants: standard (ST), long range (LR) and advanced range (AR). An estimated 234 aircraft are the -AR variant, 174 are the -LR variant and 36 are for the -ST variant. Another eight aircraft are the short runway variant operated by BA Cityflyer.

Of the 452 fleet in service, the CF34-10E5 engine is the most popular engine with 260 aircraft, with a 57.5% market share.

The CF34-10E6 engine equips 171 aircraft, or 37.8% market share, while the -10E7 engine powers 21 aircraft.

The 22 firm orders for the E-190/195 models announced in the final quarter of 2012 increased Embraer's tally for the model to a reasonable 44 units for the year. However, this is well below the 95 firm sales recorded in 2011.

In 2012, the Brazilian manufacturer delivered 62 new aircraft to customers, down from 68 the previous year.


There were 99 aircraft on backlog as of 18 February, according to Flighglobal's Ascend Online database. Ascend anticipates Embraer to deliver 42 aircraft this year, 24 in 2014 and 13 in 2015. Between 2016 and 2018, another 20 units deliveries are expected.


The CF34-10E5 accounts for 47 future deliveries compared with 41 for the -10E6 model. Another 11 aircraft will be equipped with the -10E7 engine for customers Nasair and Azerbaijan Airlines.

North America accounts for 132 units of the 452 aircraft in the total fleet, or an estimated 29.2% of the market.

Asia-Pacific is the second largest market for the type with 110 aircraft in service, or 24.3% of the total fleet.

The Latin America and the Caribbean region total 100 aircraft with customers, or 22.1%.

Europe customers account for 86 aircraft, while Africa and Middle East customers represent 24 units.

Operating lessors' exposure, through ownership and management contracts, account for 175 aircraft in service, or 39% of the total fleet. General Electric's GECAS is the largest lessor for the type with 62 aircraft with operators, followed by Air Lease (ALC) and Jetscape, after it acquired M1 Travel in 2011.


Lessors represent almost half of future deliveries with 45 units. Last month Irish lessor Aldus Aviation acquired five E-175s and 15 E-190s. The $1.56 billion deal also includes purchase rights for 15 E-Jets of any model. Aldus currently has eight 190s in its portfolio on lease to Aeromexico Connect, Regional of France, TRIP and Virgin Australia.

Ascend notes that the pace of sale and leaseback activity eased in 2012 with 12 transactions recorded against 25 deals closings in 2011 and 2010.

A potential source of supply stems from Middle East operator Nasair, which plans to exit the type over the next two years, says Ascend.

Gulf Air retired its final two E-Jets from service last month as part of the fleet rationalisation component of its restructuring plan. In 2010, the Gulf carrier kicked off its regional jet plans with the lease of two E-170s from ECC Leasing for a period of three years. Gulf Air later leased two new E-190s from Jetscape under eight-year operating lease contracts. The Bahraini national carrier confirms that those two aircraft have been retired from service, leaving Gulf Air as an all Airbus operator.

Indonesia's Sriwijaya Air said last week it could cancel a tentative agreement for 20 E-190s it signed in 2011, as the carrier considers the viability of turboprop aircraft for operations. The privately-owned carrier has put plans on hold as it evaluates the ATR 72 and the Bombardier Q400 models because of the difficulties it faces in recruiting pilots for the E-190s, especially since no other Indonesian carrier operates the type.

US operator SkyWest recently said it sees a demand for E-Jet regional jet flying from the major airlines. The regional airline group is in discussions with manufacturers and estimates it could take up to a year to add the aircraft family of jets to its operating certificate. SkyWest and ExpressJet operated a fleet of 744 aircraft at the end of 2012, made up of Bombardier and Embraer models. However, the Bombardier CRJ700 and 900 models are only regional jets in the 65- and 76-seat range that the carrier has a certificate to operate.

Re-engined variants

The Embraer 190 continues to enjoy market success, but competition from the MRJ-90, which has an entry into service scheduled from 2015, has prompted Embraer to develop a mid-life product upgrade package for its E-Jet family. The re-engined aircraft, which could be formally launched this year, will have a 15% fuel burn improvement compared with existing variants. Entry into service is planned for 2018-19.

"This mid-life initiative should bolster current order books and support value retention and lease rates until Embraer introduces a major product revamp in the form of its second-generation E-Jet from 2018 based on redesigned wings, new Pratt & Whitney PW1000G series geared turbofans and full fly-by wire systems. From that point a gradual reduction in earlier generation E-Jet values and lease rates can be expected," says ICF SH&E Angus Mackay.

According to Collateral Verifications' vice president - commercial aviation services Gueric Dechavanne the introduction of newer, more efficient aircraft such as the MRJ, CSeries, and ARJ21s could impact the E-190's residual values should they show any signs of real success.

Dechavanne also adds that the next generation of E-Jets may have an impact on the existing fleet's residual values but as these new aircraft will not enter service until the latter part of this decade at the earliest, it will be some time before this takes effect.

Ascend agrees. "There is a potential impact on current variant sales and values, argues the firm, but timescales will provide some element of protection."

Lease rates and current market values

Storage for the E-190 is fairly limited and the two E-190s recently returned by Gulf Air should not stay in the market long, say sources.

Along with the ex-Gulf Air aircraft, there are nine aircraft in storage according to Flightglobal's Ascend Online database. Of these one E-190 is a 2007-built unit, three are 2008-vintage aircraft and three were built in 2009. The remaining two are 2012-vintage models.

There is demand globally for second-hand aircraft, says a source who opines that lease rates for new aircraft are in the upper $270,000 a month range. Last year one aircraft was delivered new at $275,000 a month, he says. But later in the year some new deliveries attracted rates of $290,000 and $295,000 a month. One airline leased a new aircraft at $300,000 a month in 2012.

Monthly lease rentals have remained fairly stable during the last 12 months, says Collateral Verifications, as availability has remained low. However, Ascend says lease rates are down marginally.

IBA believes a new delivery has a $270,000 lease rate, while ICF SH&E sees the rate at $280,000 and MBA puts the rental at $285,000 per month.

Ascend opines that a new delivery has a $290,000 monthly lease rate while Collateral Verifications has the highest rental at $305,000. Minimum rentals are $230,000 for a new delivery says ICF SH&E while MBA has a minimum rate of $265,000 a month in its valuation.

ICF SH&E has the lowest rental of the appraisers for monthly lease rates on a 2004-vintage aircraft. The firm has a range between $140,000 and $180,000. Ascend, IBA and Collateral Verifications have rates of $195,000, $200,000 and $210,000, respectively.

Collateral Verifications is the highest of the appraisers with a $240,000 monthly lease rate quote for a 2007-vintage E-190 model. IBA says a 2007-vintage aircraft has a $215,000 monthly lease rate, while Ascend says $210,000. ICF SH&E believes lease rates are between $170,000 and $210,000 a month, while MBA has a range between $200,000 and $220,000 a month.

Collateral Verifications is the highest of the appraisers with a $260,000 monthly lease rate quote for a 2009-vintage E-190 model. IBA says a 2009-vintage aircraft has a $230,000 monthly lease rate while Ascend believes the going rate is $220,000. ICF SH&E puts rates between $190,000 and $230,000 a month, while MBA says between $220,000 and $245,000 a month.

Appraisers tend to disagree on rental on a two-year old model. ICF SH&E says a 2011-vintage E-190 monthly lease rate is between $220,000 and $260,000, while MBA's monthly lease range is between $245,000 and $265,000. Collateral Verifications says a 2011-vintage E-190 model has a $280,000 monthly lease rate while Ascend and IBA have $245,000 and $250,000 a month, respectively.

Dechavanne says current market demand has remained strong during the past 12 months, even in the current environment. "Current values in today's market have remained strong for new and used aircraft. In the last 12 months, values of younger aircraft have been very stable with only slight decreases in value. CV expects this trend to continue over the next 6-12 months as the market continues to improve and demand for this size aircraft increases. With some signs that the global economy may be improving in certain regions, we see values and lease rates for this aircraft continuing to remain stable over the foreseeable future."

A new delivery is estimated at $31.2 million by Ascend and $31.6 million by ICF SH&E. IBA says a new delivery has a $32.7 million current market value while Collateral Verifications has a $33.1 million valuation. MBA values a new delivery at $33.7 million.

"Values have been relatively stable, having weathered the recent economic downturn reasonably well, largely due to the economic efficiency as well as continued placement of aircraft," says MBA's Tom Burke. "Values in the short- to medium-term are expected to stay strong but could be impacted in the long term by any decisions on introducing a re-engined variant and additional competition from new entrants."

ICF SH&E is the lowest of the appraisers in the valuation of early vintage aircraft, The firm says a 2004-vintage E-190 model has a $16.4 million current market value.

Ascend and IBA value the aircraft at $18.6 million, while Collateral Verifications has a current market value of $18.6 million.

On a 2007-vintage aircraft, Ascend, IBA and MBA tend to agree on values with valuations of $21.1 million, $21.3 million and $21.4 million, respectively.

Collateral Verifications has a $21.7 million current market values while ICF SH&E is the lowest at $20.7 million.

On a four-year-old E-190, Collateral Verifications and Ascend have similar valuations at $23.2 million and $23.4 million, respectively. ICF SH&E says the aircraft has a $24 million current market value, while MBA has a $24.8 million valuation. IBA has the highest current market value at $25.6 million.

Again Collateral Verifications and Ascend are close in their valuations of a 2011-vintage aircraft with values of $26.3 million and $26.5 million, respectively. ICF SH&E and IBA value the aircraft at $27.6 million and $27.8 million. MBA is the highest with a $28.9 million current market valuation.