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

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the US are seeing gas prices dip below $3 a gallon More

Afghan Women's Soccer Team Building for the Future

A four-team female league was recently set up in Kabul; It will help identify players for the national team More

Video Koreas on Edge Amid Live-fire Drills

Pyongyang threatens nuclear test as joint US, S. Korean exercises show forces’ capabilities More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
New Skateboard Defies Gravityi
X
November 21, 2014 5:07 AM
A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Gay Evangelicals Argue That Bible Does Not Condemn Homosexuality

More than 30 U.S. states now recognize same-sex marriages, and an increasing number of mainline American churches are blessing them. But evangelical church members- which account for around 30 percent of the U.S. adult population - believe the Bible unequivocally condemns homosexuality. VOA's Jerome Socolovsky reports that gay, lesbian, bisexual and transgender evangelicals are coming out. Backed by a prominent evangelical scholar, they argue that the traditional reading of the bible is wrong.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Mexico Protests Escalate Over Disappearances

Protests in Mexico over 43 students missing since September continue to escalate, reflecting growing anger among Mexicans about a political system they view as corrupt, and increasingly tainted by the drug trade. Mounting outrage over the disappearances is now focused on the government of President Enrique Pena Nieto, accused of not doing enough to end insecurity in the country. More from VOA's Victoria Macchi.
Video

Video US Senate Votes Down Controversial Oil Pipeline - For Now

The U.S. Senate has rejected construction of a controversial pipeline to transport Canadian oil to American refineries. The $5 billion project still could be approved next year, but it faces a possible veto by President Barack Obama. As VOA’s Michael Bowman reports, the pipeline has exposed deep divisions in Congress about America’s energy future.
Video

Video Can Minsk Cease-fire Agreement Hold?

Growing tensions between government troops and separatists in eastern Ukraine further threaten a cease-fire agreement reached two months ago in the Belarusian capital of Minsk. Critics of U.S. policy in Ukraine say it is time the Obama administration gives up on that much-violated cease-fire and moves toward a new deal with Russia. VOA's Scott Stearns has more.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.
Video

Video Ferguson Church Grapples with Race Relations

Many white residents of Ferguson, Missouri, say they chose to live there because of the American Midwest community's diversity. So, they were shocked when a white police officer killed an unarmed black teenager in August – and shaken by the resulting protests and violence. Some local churches are leading conversations on how to go forward. VOA’s Ayesha Tanzeem reports.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7975
JPY
USD
118.23
GBP
USD
0.6371
CAD
USD
1.1324
INR
USD
61.929

Rates may not be current.