FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1983
1983 - 1348.PDF
"SFSP SS» .* .?'•-• . •• ..-. ••; ' •:'-y: •••:;•: '• '- Brasilia: Embraer's new commuter In Brazil they have a saying: "He who has one, has none". Two or more cars, houses, or even women, are preferable. Today, Embraer is in the happy position of having a second commuter aircraft, the Brasilia, poised to build on the eommerical success of its Bandeirante. For a relatively young company, yet to celebrate its 15th birthday, this is an enviable achievement. Ozires Silva, chairman and chief execu tive, explains that Embraer was created mainly to produce the aircraft needed by Brazil—the largest importer of US aircraft until 1973. Previous Brazilian ventures had failed, and Government money was needed to get Embraer started. Silva attributes much of the company's success to its 10-20 seat Bandeirante, which he says was the first turboprop specifically designed for the commuter role. "Nobody believed in this market, and no one invested in it". This was fine for Embraer, whose strategy was to find a new niche in the market. The "rebirth" of turboprops after the 1973 oil crisis also helped, and today some 450 Bandeirantes are flown in 24 countries. Embraer has arrived, both commercially and in terms of credibility. Dealing with a wide range of customers has kept Embraer au fait with commuter airline needs, and has played a key role in creating the 30-seat Brasilia. For Embraer, Brasilia is a natural extension of its Bandeirante expertise, but this time it is entering a crowded market. Saab- Fairchild's 34-seat SF340 is seen as the main competitor, with the slightly larger Dash 8, CN-235, and ATR42 at the top end of the range. In addition, the financial profiles of commuter airlines are very poor, making it relatively easy for poten- Embraer's 30-seat Brasilia is rolled out this week, ready to do battle in the intensely competitive commuter market. David Velupillai reports from Sao Jose dos Campos in the land of coffee, Samba, and, in the past decade, aeroplanes. tial customers to "play off the manu facturers against one other. Embraer's solution is an ambitious goal—to make the Brasilia the lightest, fastest, and lowest-power aircraft in its class. Achieving this means the cheapest direct operating cost, according to Silva, who adds that all of Embraer's creativeness, and most of its funds, have gone into the Brasilia. Being the smallest aircraft in its slot, one would expect the Brasilia to be the cheapest, offering, and at a cost of $4 • 5 million in 1983 prices, this is so. Financial edge Is the Brasilia's financial edge the result of relatively cheap labour-rates in Brazil? No, says Silva, who concedes that labour is cheaper, but points out that it is offset by lower productivity and social obligations. Silva goes further, claiming that there is less Government money invested in the Brasilia than in some of its competitors. Only about $80 million of the Brasilia's estimated $300 million development cost is guaranteed by the Brazilian Govern ment. The rest is retained profits, borrowed money, and supplier investments. By contrast, the Swedish and Canadian governments are each believed to be contributing several hundred million dollars to SF340 and Dash 8 respectively. The difficulty of financing new commuter aircraft, and the reason why governments are more involved today, is a consequence of poor airline performance, according to Silva. Buyers simply cannot make a 30 per cent down-payment and regular instalments. All they can manage is a smaller deposit and higher instalments. When Embraer created the Bandei rante, it had domestic and third-world markets in mind, and was pleasantly surprised with its sales success in the West. The company is depending much more on export sales with the Brasilia. Exactly what is the total market for 30-40 seaters? It depends on your point of view, quips Silva. In terms of aircraft needed up to the year 2000, it is roughly 2,000 aircraft. But if one considers only customers with the ability to buy, the market is about 1,000. Embraer hopes to capture 30 per cent of the market, says Silva, and, given that the Brasilia is at the cheaper end of the scale, this sounds plausible. When asked whether 250 aircraft is a reasonable break even figure, Silva says yes, "but I do not believe it". He explains that "each customer has its own requirements", and that improvements have to be paid for, FLIGHT International, 30 July 1983
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
