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Embraer hopes E175-E2 jet efficiency helps modify scope clauses

Embraer executives hope the efficiency and performance of its new E175-E2 regional jet, the third and final member of the company’s E2 family, will convince major US airlines to change the contractual “scope clauses” that currently create a barrier for operating the new aircraft in the United States.

At a media day at its US headquarters in Fort Lauderdale, Florida, Chief Commercial Officer of Embraer Commercial Aviation Arjen Meijer reiterates that the E175-E2 will have its maiden flight “before the end of the year” and is on track to enter service in 2021, despite the lack of orders from North American operators.

“The E175-E2 undoubtedly will be the most efficient aircraft in that segment,” Meijer says. “We believe not only in the economics but in the environmental benefits of the E175-E2, and that will speak to the market.”

Sales of the Brazilian plane maker’s newest jet have been hindered by the fact that the E2 variant, outfitted with more powerful and heavier Pratt & Whitney PW1700G turbofan engines, push its maximum take-off weight to beyond the conditions specified in the scope clauses that govern regional air transport in the United States.

Scope clauses are provisions in contracts between major US airlines and their pilot unions which keep the airlines from farming out more flying to regional airlines. They prohibit regional affiliates from operating aircraft that have more than 76 seats or maximum gross takeoff weight in excess of 86,000lb. While the first generation of the E170 and E175 fulfilled the clauses, the E175-E2 with the new engines would put the aircraft 12,000lb over that maximum weight.

“Historically, scope clauses only changed once there was a product that pushed it to change,” Meijer says. “There are definitely some areas in the North American market where we think this aircraft can go. But the scope clause is a certain topic. There needs to be a scope clause change in the end to allow the E175-E2 to fly.”

Meijer also says that the company is “working on” a launch customer for the E175-E2, but would not name it.

North America is a critical market for Embraer’s aircraft. More than 50% of the 3,400-strong regional jet fleet flies in the continent – the biggest regional jet market - and without changes in the rules, the E175-E2 will in the future effectively leave that lucrative market to Mitsubishi. The Japanese manufacturer is developing its SpaceJet M100, designed to carry 76 passengers in two classes. The SpaceJet will have next-generation PW1200G turbofans and will not exceed the 86,000lb limit. So barring a lifting of the weight cap, the new-technology M100 essentially competes in the USA against the older-generation E175.

In mid-September, Embraer delivered its first E195-E2, the second and largest variant of its E2 family, to Brazil’s Azul, and said that further deliveries are imminent. The manufacturer launched the smaller E190-E2 in 2018, with Norway’s Wideroe as the launch customer. So far eight of these aircraft have been delivered – three to Wideroe and five to Air Astana.

The E195-E2 aircraft is slightly longer than the first generation E195, with a maximum capacity of 146 seats and a range of 4,815 km (2,600 nautical miles). But Meijer says the manufacturer did more than just stretch it.

“It still looks like an E-Jet – the fuselage is the same, but a lot of change went into it,” Meijer says. A fourth generation fly by wire system, new avionics, new wings, a lower fuel burn and a redesigned cabin are some of the innovations that Embraer built into the new E195-E2.

Nevertheless, the aircraft manufacturer made a conscious decision to keep the same cockpit philosophy, says Jorge Nasser, Regional VP of Sales in North America. “We know that a lot of the potential customers will come from the huge customer base of the E1 jets. Pilot training is an important driver and requirement for us.” Pilots are able to transition to the new E2 aircraft with just two and a half days of training, he adds.

But despite the flashy new younger siblings, the first generation E-Jets continue to remain attractive for many customers and Embraer is happy to continue to supply them.

“As long as there is demand, we will continue to build the E1s,” Meijer says, adding that about 20% of the 85-95 E-Jets this year will be E2s, with the rest being the first generation variant. “We see new orders coming in for both E1 and E2.” Both aircraft are built on the same production line.

Between now and 2038, the company anticipates it will deliver 10,550 new aircraft, of which about 80% or 8,230, will be jets. Uses will include hub feeding, interchangeability on routes during the day, new markets, and smaller secondary and tertiary airports.

Embraer already is the leader in the market for aircraft up to 150 seats with about 29% market share. The company says it expects that percentage to grow, despite new entrants from China and Russia. There are currently more than 1,900 Embraer jets in operation, by 120 companies in 70 countries.

Last month Embraer said it estimates its strategic partnership with Boeing, first announced last year, will close "in early 2020", diverting from previous expectations that the deal would close by the end of 2019. In September, the European Commission decided to open a further assessment in its antitrust review of the transaction.

Boeing's deal with Embraer calls for the Chicago-based company to acquire 80% of the Brazilian airframer's commercial aircraft division for $4.2 billion. The new joint venture company will be named Boeing Brasil – Commercial and give the commercial planemaker a foothold in the regional jet market.

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