Embraer Forecasts $201B in Exec Jets

Embraer foresees a market for 13,150 business jets over the next decade, valued at approximately $201 billion with the possibility that the new air taxi market may add yet another 3,500 to 4,400 aircraft in very light or light jets where the company competes with its Phenom aircraft. The first Phenom 100’s maiden flight occurred on July 26 and began its test campaign, being joined by the second Phenom 100 upon its first flight on September 21. The first metal cut of the Phenom 300 occurred late March and its sub-assembly began in mid-August.
In the commercial market, where it is a leader in the under-120-seat market, Embraer projects that world air traffic demand will increase by 4.9 percent per year in 2008-2027, with China presenting the highest growth rate (7.5 percent per year). Latin America, Middle East, Asia Pacific, Russia/CIS and Africa will grow around 5.5 percent, and mature markets, such as North America and Europe, around four percent. Embraer foresees a global demand for 7,450 jets in the 30- to 120-seat capacity segment over the next 20 years, resulting in a total market value estimated at $235 billion. The company projects that 3,150 aircraft will be delivered in 2008-2017.
The forecast was released in conjunction with the eighth Embraer Day held November 13 and 14 at its headquarters in São José dos Campos, Brazil. At the same event, Embraer announced its commercial and executive jet delivery forecast for 2008 and 2009. Embraer expects to deliver, in 2008, between 195 and 200 aircraft in the commercial aviation, executive aviation and defense and government segments, and between 10 and 15 Phenom 100 that are not included in its annual delivery estimates. For 2009, the company estimates delivery of 195 to 200 aircraft in addition to the 120 to 150 Phenom 100 and Phenom 300.
The forecast indicates that the 30- to 60-seat capacity segment has reached maturity, but will remain the backbone of the US and European hub feeding system and will support the regional aviation development in some other world regions, such as China and Russia/CIS.
The 61- to 120-seat aircraft will continue to help airlines to match capacity to market demand with improved service levels, through the right-sizing of low load factor narrow-body flights, the natural growth of 50-seat regional jets and the expansion into mid-sized markets.
Embraer believes that emissions are one of the important drivers for airline fleet decisions, tending to accelerate old/inefficient jets retirement in the short term and influence future aircraft design in the mid-long term. Around 30 percent of current 61- to 120-seat jets in service are more than 20 years old and shall be replaced in the coming years, resulting in substantial environmental and operational benefits.
This September, Embraer presented two new concepts in midsize and mid-light executive jets under study. If launched, upon board approval, these clean-sheet design concepts will be positioned between the Phenom 300 and the Legacy 600 in the company’s executive jet portfolio. Related Story
Embraer continues to invest heavily in its Executive Jets Customer Support. The company broke ground for three new service centers in the United States, in Connecticut, Arizona and Florida. The authorized service center network was expanded with the addition of ABS Jets in the Czech Republic, and Hawker-Pacific in Asia. By 2008, 45 service centers will support Embraer’s executive fleet, seven of which are wholly-owned.
Announced under the joint-venture established with CAE for Phenom jets training, the first training simulator for the Phenom 100 jet will be placed in Dallas, TX, by mid-2008 to support the entrance into service of that model in the U.S. The European program will be based in the United Kingdom and will commence upon entry into service of the Phenom 100 in Europe, in the first quarter of 2009. Embraer is investing heavily in parts inventory and logistics and continues to enhance its special maintenance programs. Embraer’s commitment to business aviation has continued to render significant results throughout this year.
The Executive Jets division holds a firm order backlog of close to $4 billion, significant increase from US$ 2 billion in 2006 and US$ 600 million in 2005. Firm orders for the Phenom 100 and Phenom 300 Very Light and Light Jets stand at close to 600 units.
Currently, there are 121 Legacy 600 executive jets operating in 22 countries. Embraer expects to deliver over 30 Legacy 600 jets in 2007 and 30 to 35 in 2008, up from 27 units in 2006, 20 in 2005 and 13 in 2004.