Embraer forecasts flat 2011 for business jets

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The market for business jets will not begin to recover from its post-financial crisis slump until 2012 at the earliest, according to Brazilian airframer Embraer, which is forecasting this year to be flat at best, with a potential overall decrease in deliveries.

Cláudio Camelier, marketing vice-president for executive aviation, told a briefing at his company's headquarters in São José dos Campos that although corporate profits, a key driver of business jet deliveries, had returned to pre-crash levels, this had yet to filter through to the business jet market.

"We are used to seeing business jet deliveries going up one to two years after corporate profits rise [post-recession]. However, in this instance we believe the recovery will take a little longer," he said.

He pointed to the uncertainty over whether the recovery will be sustained, the low level of business jet utilisation, indicating "there is spare capacity in the system" and the fact that almost 14% of the global business jet fleet - around 2,500 aircraft - is up for sale, up from 12% before the crisis, as key reasons for the apparent delivery lag.

He believes smaller aircraft have been hardest hit and that as a result, airframers will reduce production in 2011 to cope; for example Embraer will cut the output of its Phenom 100 and 300 business jets to 100, down from 126 in 2010.

However, Camelier thinks some regions will bounce back quicker than others, identifying the Chinese market as offering potential for strong growth: at present there are just 100-150 business jets in the country, which Embraer predicts will rise to 600 in the next 10 years, representing around 7%, or $14 billion, of the business aviation sector's global revenues.

The company's Legacy 500, due to enter service in 2013, will be ideally suited for the Chinese market, he says.

Embraer has an assembly site in China, a joint venture with AVIC, which produces the ERJ-145 regional jet. However, the future of the plant is up for discussion, with potentially either the Embraer 190 or Legacy being produced there instead.

Meanwhile, Embraer is ramping up production at its new site in Melbourne, Florida, which will initially assemble Phenom 100s. It says the Phenoms produced in the USA will be more expensive than the same aircraft produced in Brazil, but the difference "will not be a significant value".

Camelier said: "There will be a slight price differential, but although they will pay more they won't have to fly to Brazil and then ferry them up to the USA. It will work out almost even."

This will mean that European customers will have the option of choosing either US- or Brazilian-built aircraft, with the former cutting the distance of the ferry flight,

Camelier also confirmed that the Legacy 600 will continue in production, despite lower deliveries than its longer-range sibling, the Legacy 650. There is still a market for the jet, he says, among customers "who don't need the additional range".