Daily Insight: Friday 31 May 2019: Embraer Market Forecast 2019

News At their Media Day in Sao Jose dos Campos Brazil earlier this week, Embraer revealed their 2019 market forecast for the market up to 150 seats. The company projects 10,550 new jet and turboprop aircraft in this segment over the next 20 years, as shown in the following chart.The distribution of projected deliveries by region shows Asia Pacific leading with 2,990 deliveries, Europe and the CIS second with 2,820, North America third with 2,780, Latin America fourth with 1,150 and Africa and the Middle East fifth with 810. Analysis The total number of aircraft in the Embraer 2019 forecast remains the same as their 2018 forecast at 10,550 aircraft up to 150 seats. This total includes the potential market for the A220, A319, 737 MAX7, and E2 Jets family, as well as regional turboprop models.Boeing, in its 2018 Current Market Outlook, projected sales of regional jets and single aisle models. Their projection included 2,370 regional jets and 29,530 single aisle jets. Because a growing proportion of single aisle sales are above 150 seats, we can compare the Boeing total with Embraer’s forecast and calculate expected single aisle sales above 150 seats, including the A320, A321, 737 MAX8, 737 MAX9, and 737 MAX10 models. That would result in a forecast for 21,350 single aisle deliveries above 150 seats over the next 20 years. (We will update these results after the 2019 Boeing CMO is revealed at the Paris Air Show.) At an average of more than 1,067 aircraft per year, this remains the heart of the narrow-body market. AirInsight expects Airbus to have a 60/40 market share of this market due to the popularity of the A321neo series, and the A321XLR, aimed at the 757 replacement market to be introduced later this year in Paris. Insight Sales of aircraft under 150 seats have been slower than desired for all of the market participants. Airbus A220 has shown promise with a couple of big orders, but is still in transition as a joint venture. Similarly, the Embraer E2 jets have not sold well as yet, primarily because replacement of existing EJets is likely a decade away given the youth and continuing competitiveness of those aircraft. The A319neo and 737 MAX7 have not sold well, as both are too heavy and economically disadvantaged when compared with A220-300 and E195-E2.We project the market for aircraft under 150 seats will grow slowly over the next decade, but increase late in the decade when replacements of existing aircraft begin in higher numbers. In the interim, we expect slow growth in this segment when compared with the larger single-aisle models. However, the production runs of 4,000 plus aircraft each should result in the E2Jets and A220 series both being profitable aircraft over the longer term. We concur with projected growth, but not as quickly as the OEM might desire in the up to 150 seat segment.

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