Embraer remains relatively stable in its business jet production and backlog despite a newly revealed 2009 assessment by chief executive Frederico Curado that backlog was to be depleted by 2011 or 2012, "leaving Embraer with no planes to produce".
The frank conversation, recorded by then US ambassador Clifford Sobel from the São Paulo consulate on 19 February 2009 and revealed by the recent WikiLeak postings, paints a bleak picture of the airframer's future.
"According to Curado, the financial crisis has brought Embraer's new sales to zero," Sobel writes in the cable. He says Curado expected "the crisis to have abated in three to four years, though he foresees further depreciation of assets worldwide".
Further, Sobel reported that Curado said that some clients had cancelled contracts "despite losing deposits as high as 40% of the value of the plane".
While not directly addressing the Sobel conversation, Curado in an email response to a Flight Daily News query on the cable, says the financial crisis "had a strong impact across the whole aviation industry, and Embraer was no exception". He notes that while total firm backlog had decreased from its "all-time high" of $20.5 billion in the second half of 2008 to $15.5 billion in the second quarter of 2009, the "negative trend" reversed by the third quarter of 2010, with backlog rising to $15.6 billion.
With its expanded portfolio of seven business jets, Embraer has been growing its share in the executive jet market even in the worst of times, with 17.2% share by volume as of the third quarter of 2010, says Embraer vice-president of executive aviation Claudio Camelier. The market share is largely being driven by Phenom 100 deliveries, already at 67 as of September, the highest number by any manufacturer.
Embraer in 2005 set a goal of becoming a "major player" in the business aviation sector by 2015, a benchmark the company then said would mean having about 30% of the entry-level and light jet market by volume, 15% of the super-midsize sector and 20% of the ultra-large cabin niche. The company in 2005 had a 2.7% market share with its only offering, the ERJ-135-based Legacy 600 super midsize.
Regarding the Middle East, Camelier says the 350-strong business jet fleet today will nearly double by 2020, with nearly 60% of the $11 billion in aircraft coming from the ultra-large and ultra-long-range business jet. While Embraer covers the ultra-large aircraft niche with the Legacy 1000, it does not currently have an offering in the ultra-long-range category.
"It's an open vacancy in our portfolio, but it's not more than that at this point in time," says Camelier, adding that there are no plans currently to develop a specific product for that segment. Competitors Gulfstream and Bombardier are both launching aggressive programmes to capture the lucrative sector, with the G650 and Global 7000/8000, respectively.
Source: Flight Daily News
