Embraer considers development of larger aircraft

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Embraer is studying the possibility of developing a larger commercial aircraft either alone or in partnership with another company, but says it has no near-term plans for such a project.

The Brazilian aircraft manufacturer's largest commercial jet at present is the 118-seat E-195. A bigger offering would face competition from Airbus and Boeing, which dominate the narrowbody market with the highly-successful A320 family and 737, respectively, as well as Bombardier, which recently launched its 110/130-seat geared turbofan (GTF)-powered CSeries airliner.

During an earnings conference call this morning to discuss the company's sharp drop in third quarter profit despite increased sales, Embraer CFO Antonio Luiz Pizarro Manso said: "Whether we should develop a larger plane, alone or with partners, is something that we will have to decide."

He added: "Right now, we think the market is well supplied by the existing models, the 737 and the A320. So our strategy is to wait a bit, especially to see what kind of engine can be developed for such a project."

Reports from Sao Paulo quote Airbus president and CEO Tom Enders as saying that the European airframer is open to aircraft partnership ideas that involve Embraer.

Embraer president and CEO Frederico Fleury Curado this morning called a potential tie-up "speculation" and said the firm has "nothing really to declare in that sense".

He noted Enders is in Brazil visiting customers. "EADS is a partner of Embraer. It has been a shareholder for many years. It is partners with us in OGMA in Portugal. It's a courtesy visit, a general purpose visit."

Embraer previously indicated its next aircraft offering is not likely to be introduced until mid-next decade.

As of 30 September, Embraer's firm order backlog had reached a record high of $21.6 billion, including sales to the executive aviation market. The E-170/190 jet family backlog accumulated a total of 865 firm orders and 813 options.

Despite the economic slowdown, Embraer has "not changed our conservative stance" on the issue of aircraft financing, said Curado, noting that bridge financing is the least offensive of such arrangements.

However, protecting Embraer's cash remains a top priority, said the airframer's chief executive.