Brazilian aircraft manufacturer Embraer sees itself coming out even stronger without the established joint venture with Boeing. The partnership was founded in February 2019, after Boeing agreed to purchase an 80% stake in Embraer's commercial aircraft division, but in April 2020 it was not executed due to the pandemic and an uncertain market outlook.
During my recent visit to the Embraer Final Assembly Line in Sao Jose Dos Campos as well as in Sao Paolo, I had the chance to talk with Francisco Gomes Neto, who was appointed President and CEO of Embraer in May 2019.
The President was clear when we talked about Embraer's plan to deliver up to 70 aircraft this year, but still below more than 100 aircraft some years ago.
“We plan to grow double digits every year and we believe, in the next four to five years it will be a company in seven to eight billion US dollars in revenues compared to $4.5 billion we handled last year, in the guidance for $5.2 billion to $5.7 billion this year. And this with the existing portfolio of products“.
Embraer President and CEO Francisco Gomes Neto
Embraer is aiming to produce 100 aircraft in commercial aviation. Several sales campaigns are ongoing, in commercial, and also in defense. In terms of Executive (Business Jets), the company has sold out in 2023 and 2024 and it has almost sold out in 2025 already. “Our production slots for 2024, considering the limitation of supply chain challenges, we have them filled and we just need to deliver the aircraft. We continue to focus on innovation and efficiency. We delivered 57 aircraft (E-Jets) last year, upcoming from 45 in 2021. With the initiatives to reduce the (production) cost of the aircraft, even with the 57 aircraft we were able to be profitable last year“.
Gomes Neto believes, with the forecast of the global rebound of domestic and regional flights, in 2024 it will be at the same level (again) as before the pandemic and we will see more demand for the aircraft.
“I believe four years from now we will produce 100 aircraft again or even more and commercial aviation will be an important contributor. Our infrastructure is prepared. Supply must improve, where we think next year will be normalized and then we need just to find more people“.
Embraer President and CEO Francisco Gomes Neto
The Divorce with Boeing
It looks like Embraer has overcome the Boeing divorce from April 2020.
“Related to the joint venture with Boeing we are in a retraction process. We expect a solution by the end of this year or the beginning of next year. This does not include defense, just the costs“.
Embraer President and CEO Francisco Gomes Neto
Embraer has put in place a lot of initiatives, to prove the efficiency and enhanced the sales of its' existing portfolio. “We are lucky, to have a portfolio of products which is very modern and the E2 we launched in 2018 (before the pandemic). Now it is a good time, the airlines are starting to think about renewing the fleet“.
“We are in a very good situation and it is very realistic that in 2023 we have more deliveries compared to 2022. I know the competition is not easy, but I believe we have a very good product that we do our best to convince. And yes we are a healthy company and are reducing the debt, the company is performing much better and will become much stronger because of the plans and initiatives in place. The perspective is very good“.
E2 Production overtakes E1
Once the pilot shortage issue is resolved, which the CEO believes will be in 2026. Embraer has an excellent opportunity to continue to sell the E175 and it still seems to have a chance in the US. Porter Airlines (Toronto) is another great example which has 50 E Jets on order.
“This year, it will be the first year where we will produce more E2 than E1s. So I think we have opportunities everywhere. We are working on more campaigns in a good part of the market besides the competition“.
Embraer President and CEO Francisco Gomes Neto
In Asia, Embraer just sold nine aircraft to Scoot, which opens a very good opportunity. These aircraft serve the regional network with 10% more efficiency compared to the competition. And it is a sustainable solution with the best cost per seat. “This has value. China is very important and our market intelligence says in the next 20 years Asia will demand more than 2.200 aircraft, and out of that 1.400 are in China. Almost 200 planes have been delivered to China. It is time to be back in China for new sales and deliveries to that country“, Gomes Neto added, who went on a business trip to China after this interview.
“Our market intelligence tells us for our E Jets in general up to the 150 seat-segment, in the next 20 years it is about 8500 units more or less. If you get a part of this market, it will be enough to keep Embraer strong, profitable, and continuing to develop new aircraft and keep competing in the market. It is very important that competition for the market and the customer is there. Can you imagine competition without Embraer? This is not healthy. We are working on all the fronts."
Future Turboprop Project
Embraer decided to put it on hold to find the right solution for the engines. “We do believe the aircraft has potential demand, but we didn’t find the engines. We have so many good opportunities at Embraer, that we are discussing now with our engineers, the innovation team, finance, how to fund the programs“.
“But we work on all the fronts of energy. We are concentrating on two products, electric and hydrogen. Electric (aircraft) between 19 and 30 seats. And if the customer wants more seats, we are focusing on two aircraft to develop this concept further during 2023 and be ready to decide something maybe during 2024. So we have a very good portfolio for the next five to six years, but we are working very hard to guarantee the future with Embraer for a nice product planning as well“, Francisco Gomes Neto concludes.