Embraer hopes E-175 demand will prevent potential production slowdown

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Embraer is concerned about a possible commercial aircraft production slowdown between 2016 and the official launch of its second-generation E-Jet E2 in 2018, says Paulo Cesar Silva, president and chief executive of Embraer's commercial aviation division.

Silva adds, however, that demand in North America for the company’s popular E-175 should keep the production lines humming and minimise the chance of a slowdown. He made his comments to reporters during a press conference at the company's Brazil headquarters last week.

“Given the need in the US market to replace 50-seaters and the need to modernise the US fleet, I think [there will be] big demand for the 175, “ Silva says. “It will help fill the gap.”

Embraer must maintain production of current generation E-Jets until production ramps up on the next generation E-Jet E2, which will have newly-designed, larger wings and more-efficient Pratt & Whitney PurePower PW1700G and PW1900G geared-turbofan engines.

Embraer had 366 unfulfilled firm orders for current generation E-jets at the end of June, according to the company. And Embraer’s chief executive Frederico Curado says the company will maintain its current production rate of roughly eight aircraft monthly, or 90 to 95 yearly, though 2014.

If that rate remains steady, and if Embraer receives no additional firm orders for current generation aircraft, Embraer would fulfil all outstanding orders for current generation aircraft sometime in 2017.

The company expects its E-190-E2 to enter service in 2018, while the E-195-E2 and E-175-E2 are expected to enter service in 2019 and 2020, respectively. Embraer is not producing a next-generation version of the E-170.

Embraer has received 150 firm orders for E-Jet E2s, plus options for 150 aircraft and letters of intent for 65 aircraft, Embraer says.

Silva notes airlines have “short, medium and long-term needs” for aircraft, meaning that carriers will likely place more orders for current-generation models because they can be delivered sooner than E-Jet E2s.

He adds that Boeing and Airbus have had success with updated versions of their current-generation 737 and A320 family aircraft.

Silva predicts US airlines will go through a second round of regional aircraft acquisitions in the coming years, and he estimates US carriers will require at least 400 new jets in the 76-seat range in the next four years.

The first round has already happened, with orders for more than 100 aircraft coming this year from SkyWest, United Airlines and Republic Airways.

American Airlines has said it may purchase 60 regional jets, but the deal has been delayed by the US Department of Justice’s lawsuit seeking to block American’s merger with US Airways.

To help keep demand strong, beginning next year Embraer will begin selling current-generation E-Jets with modifications that the company says will cut fuel burn by 5% on the E-175.

That aircraft will have new wing tips that extend from the wing at a more shallow angle thatnwing tips on current aircraft.

The E-170 is the only variant that will have new wingtips, but Embraer is making other modification to all models. The company is reducing the gap between the aircraft tail and horizontal stabiliser and making modifications to the tail cone, cabin door “rain deflector” and nose-wheel fairing.

It has also changed the "ram air" door, which feeds the air conditioning system. The position of the new door can be controlled depending on flight conditions, which will reduce drag, the company says.

Those modifications will improve fuel efficiency by 1% to 2% on E170s, E-190s and E-195s, the company says.

In addition, by 2015 current-generation E-Jets will have improved avionics and cabin interiors, says Embraer.

Embraer says its E-Jet E2s will cost 15% less to maintain than the current model, saving carriers $1 million to $1.5 million annually per aircraft.

In addition, the jets will be 16% to 23% more fuel efficient than current models, the company says.