Has Embraer turned the corner?

Embraer, in the last few years, has been hit by several events outside of its control, including the deal breakup with Boeing, the global pandemic, and continued pilot union intransigence regarding the scope clause, impacting the regional jet segment in its largest global market. The impacts of these actions sent revenues plummeting from $5.4 billion in 2019 to $3.7 billion in 2020, which recovered to $4.5 billion in 2022. The company is projecting revenues between $5.2 and $5.7 billion in 2023, which would be close to 2019 results before the multiple crises. Their CEO, Francisco Gomes Neto, has set a target of $8 billion in revenue in 2027, an ambitious growth plan. Has Embraer turned the corner since the Boeing breakup and global pandemic in 2020? We’ll examine that question market segment by market segment. Embraer has four major business segments, commercial aircraft, business aircraft, military aircraft, and service and support. The company also holds the majority of equity in Eve, the leader in urban mobility that it spun off as an IPO to fund development. In this series of articles, we will examine each of the sectors and comment on the near and longer-term outlooks for each business unit. DEFENSE Embraer participates in the defense market with two major aviation products, the C390 multi-mission transport and tanker, and the A29 Super Tucano light attack turboprop and trainer. But that isn't the full story of Embraer in defense. Through three key acquisitions, Atech, a systems house, Visiona, a remote sensing and satellite telecommunications company, and Aguis Azuis, which builds Naval frigates, Embraer has a full portfolio of defense services, as shown on the following chart: The two major aircraft programs have a significant potential market over the next 20 years. The C390 reached full operational capability in March 2023 and is fully ready to support militaries, including NATO with three key customers. The KC390 Agile Tanker version of the aircraft has a flying boom and meets current USAF requirements. Embraer estimates a $60 billion potential market over the next 20 years for this aircraft. The A29 Super Tucano is an excellent light attack and training aircraft, competing with Pilatus and Beechcraft in key markets. The addressable market for the A29 is estimated at $6.5 billion over the next 20 years. The A29 has been an excellent trainer internationally but lost a US competition to Beechcraft a few years ago. The new A29N version may be helpful for the next competition. Embraer Defense also has several international partnerships, including a partnership with L3 Harris for the KC390 Agile Tanker program aimed at the USAF. Unfortunately, recent comments by Brazil's President Lula regarding the war in Ukraine while in China may harm chances for future NATO sales by Embraer. Geopolitics is a greater factor in defense than in civil aviation. The Bottom Line - Defense Embraer is much more than aircraft in the defense business. While the company has made inroads into NATO, it still needs a major US contract for the KC390 to secure the market traction it needs. Technically, the aircraft is excellent, but geopolitics are a factor in the market. All things being equal, both the A29N and KC-390 are excellent aircraft that should do well in competition with competing aircraft. But the final decisions are made by politicians, which is outside of our forecasting expertise. While the outlook for Embraer Defense is positive, they need a major win to secure a stronger global position to ensure future success. Geopolitics aside, they are well-positioned with strong partners around the world and should fare well given the capabilities and versatility of their products.

US Flight Planner - US DoT On-Time Data	Airbus vs Boeing - Official OEM Data
US Airline Schedule Performance - US DoT Data	Daily OEM Production & Deliveries -

Subscribe To Our Newsletter

Related News

Subscribe To Our Newsletter

Related News

JetZero’s Buzzing Week In Farnborough

MHIRJ Starts Evaluating CRJ Successor

Rolls-Royce’s Option: Embraer or JetZero, Not the Duopoly