News / Economy

Planemaker Embraer Sees American Closing Out US Regional Jet Cycle

Private jets are seen at the Embraer headquarters in Sao Jose dos Campos, Brazil, May 14, 2013.
Private jets are seen at the Embraer headquarters in Sao Jose dos Campos, Brazil, May 14, 2013.
Reuters
Embraer SA, the world's third-largest commercial jet maker, expects just one more big regional jet order as a result of its current U.S. sales campaign, Chief Executive Officer Frederico Curado said in an interview, after the Brazilian planemaker clinched three of four major deals since December.
 
“After the American Airlines competition, the game is over for a while,” Curado told the Reuters Latin America Investment Summit late on Thursday, reinforcing views that Embraer has come away victorious in the latest round against Canadian rival Bombardier Inc.
 
Curado said much of the lingering demand for regional jets over the next year or so, which could amount to between 150-250 planes seating up to 76 passengers, is likely to be satisfied by outstanding options in recent contracts.
 
Embraer booked the lion's share of those contracts over the past six months, with 117 firm orders from United Airlines and regional operators SkyWest Inc and Republic Airways - plus options for an additional 247 jets.
 
Bombardier's only major U.S. contract in the same period was a December deal with Delta Air Lines for 40 firm orders and 30 options.
 
Bolstered backlog
 

Embraer's flurry of new orders this year, worth at least $4.8 billion at list prices, guaranteed stable or growing output of its regional E-Jets in coming years, Curado said, in his first interview since a “milestone” Tuesday order from SkyWest.
 
Bank of America Merrill Lynch analysts estimate that Embraer's order backlog may rise from a six-year low last year to 16.1 billion Brazilian reais ($78.58 billion) by June -its highest since 2009.
 
While U.S. demand has concentrated on the smaller E175, due to renegotiated labor contracts for regional airlines, Curado said there is ongoing sales activity for larger models in the E-Jet lineup, despite a slowdown in their traditional markets.
 
“Europe is facing a tricky economic outlook and the Chinese market for regional aviation has been settling. So at this point we're talking about smaller volumes, but the E190 is the most-sold of the E-Jet family and that should continue,” he said.
 
Embraer's backlog should continue to grow next year, according to analysts at Brazilian investment bank BTG Pactual, pointing to the outlook for smaller orders from emerging markets and continued demand in North America.
 
Curado said he expected most demand for jets of around 100 seats to come from fleet renewals over the coming decade, rather than market growth. He mentioned hundreds of aging Fokker 100, McDonnell Douglas DC-9 and Boeing 737-200/300 that will need to be replaced.
 
While that represents a small slice of airlines' global fleets, Curado said it will remain Embraer's core business, justifying a hefty investment to renew the E-Jet lineup with more fuel-efficient engines, wings and other systems by 2018.
 
Engineers have been working two years on the specifications of the next generation of planes, Curado said, but the program is still awaiting approval by Embraer's board of directors.
 
Many analysts expect the formal launch of the next generation next  month at the Paris Air Show, which Curado neither confirmed nor denied.
 
If Embraer does go ahead with the program, Curado said it could cover development costs using cash flow and debt, with no need to raise new capital.

You May Like

Brutality Eroding IS Financial Support

Director of National Intelligence James Clapper says IS's penchant for publicizing beheadings, other brutal forms of punishment hurts group’s bottom line More

Studies: Climate Change a Factor in Disasters in Syria, California

The studies point to the possibility of clear and present dangers from a threat often considered to be far in the future More

Video Afghan Refugees Complain of Harassment in Pakistan

Afghan officials and human rights organizations assert that Pakistani authorities are using deadly attack at school in Peshawar as pretext to push out Afghan refugees More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Kerry Seeks Assurances of Russian Non-Interference in Ukrainei
X
March 03, 2015 3:11 AM
U.S. Secretary of State John Kerry has told his Russian counterpart, Sergei Lavrov, that his country could face further consequences to what he called its “already strained economy” if Moscow does not fully comply with a cease-fire in Ukraine. The two met, on Monday, on the sidelines of a U.N. Human Rights Council meeting in Geneva, where Kerry outlined human rights violations in Russian-annexed Crimea and eastern Ukraine. VOA State Department correspondent Pam Dockins reports from Geneva.
Video

Video Kerry Seeks Assurances of Russian Non-Interference in Ukraine

U.S. Secretary of State John Kerry has told his Russian counterpart, Sergei Lavrov, that his country could face further consequences to what he called its “already strained economy” if Moscow does not fully comply with a cease-fire in Ukraine. The two met, on Monday, on the sidelines of a U.N. Human Rights Council meeting in Geneva, where Kerry outlined human rights violations in Russian-annexed Crimea and eastern Ukraine. VOA State Department correspondent Pam Dockins reports from Geneva.
Video

Video Smartphones May Help in Diagnosing HIV

Diagnosing infections such as HIV requires expensive clinical tests, making the procedure too costly for many poor patients or those living in remote areas. But a new technology called lab-on-a-chip may make the tests more accessible to many. VOA’s George Putic reports.
Video

Video Afghan Refugees Complain of Harassment in Pakistan

Afghan officials have expressed concern over reports of a crackdown on Afghan refugees in Pakistan following the Peshawar school attack in December. Reports of mass arrests and police harassment coupled with fear of an uncertain future are making life difficult for a population that fled its homeland to escape war. VOA’s Ayesha Tanzeem reports from Islamabad.
Video

Video Ukrainian Volunteers Prepare to Defend Mariupol

Despite the ongoing ceasefire in Ukraine, soldiers in the city of Mariupol fear that pro-Russian separatists may be getting ready to attack. The separatists must take or encircle the city if they wish to gain land access to Crimea, which was annexed by Russia early last year. But Ukrainian forces, many of them volunteers, say they are determined to defend it. Patrick Wells reports from Mariupol.
Video

Video Moscow Restaurants Suffer in Bad Economy, Look for Opportunity

As low oil prices and Western sanctions force Russia's economy into recession, thousands of Moscow restaurants are expected to close their doors. Restaurant owners face rents tied to foreign currency, while rising food prices mean Russians are spending less when they dine out. One entrepreneur in Moscow has started a dinner kit delivery service for those who want to cook at home to save money but not skimp on quality. VOA's Daniel Schearf reports.
Video

Video US, Cuba Report Progress in Latest Talks to Restore Ties

The United States and Cuba say they have made progress in the second round of talks on restoring diplomatic relations more than 50 years after breaking off ties. Delegations from both sides met in Washington on Friday to work on opening embassies in Havana and Washington and iron out key obstacles to historic change. VOA’s Mary Alice Salinas reports from the State Department.
Video

Video Presidential Hopefuls Battle for Conservative Hearts and Minds

One after another, presumptive Republican presidential contenders auditioned for conservative support this week at the Conservative Political Action Conference held outside Washington. The rhetoric was tough as a large field of potential candidates tried to woo conservative support with red-meat attacks on President Barack Obama and Democrats in Congress. VOA Political Columnist Jim Malone takes a look.
Video

Video NYC's Restaurant Week: An Economic Boom in Fine Dining

New Yorkers take pride in setting world trends — in fashion, the arts and fine dining. The city’s famous biannual Restaurant Week plays a significant role in a booming tourism industry that sustains 359,000 jobs and generates $61 billion in yearly revenue. VOA's Ramon Taylor reports.
Video

Video Brookhaven at Cutting Edge of US Energy Research

Issues like the Keystone XL pipeline, fracking and instability in the Middle East are driving debate in the U.S. about making America energy independent. Recently, the American Energy Innovation Council urged Congress and the White House to make expanded energy research a priority. One beneficiary of increased energy spending would be the Brookhaven National Lab, where clean, renewable, efficient energy is the goal. VOA's Bernard Shusman reports.
Video

Video Southern US Cities Preserve Civil Rights Heritage to Boost Tourism

There has been a surge of interest in the American civil rights movement of the 1950s and '60s, thanks in part to the Hollywood motion picture "Selma." Five decades later, communities in the South are embracing the dark chapters of their past with hopes of luring tourism dollars. VOA's Chris Simkins reports.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.8907
JPY
USD
119.77
GBP
USD
0.6496
CAD
USD
1.2492
INR
USD
61.941

Rates may not be current.