Embraer orders and deliveries were just announced for 2015 delivery. Embraer ended the year delivering 101 commercial aircraft and 120 business jets (82 light and 38 large business jets). The total 221 aircraft is the highest volume of deliveries in the last five years. Embraer’s success of the business jet market continues, but we will focus on the regional jet market in this post. On December 31 Embraer‘s order backlog reached $22.5Bn. The regional jet backlog stands at 513 aircraft, with a positive book-to-bill ratio of 1.5 for 2015.
Let’s look at the numbers.
There has been a sharp change over the years as the E-175 eclipsed the E-170. As the next chart demonstrates, this has been coming for a while.
The E-195 has eclipsed the E-190. Looking at the larger models, there appears to be a swing towards the larger, more capable, aircraft. Historically the E-190 represented 72% of the orders, but in 2015 this dropped to 32%.
Overall, by order measure, Embraer customers look to be focusing on two models, the E-175 and E-195. As the E2 comes on stream it will be interesting to see if the E2-190 catches on and holds its historical role as the more popular of the bigger Embraers.
We started with Orders because that drives Deliveries. The numbers from the first chart demonstrate that Embraer is all about the E-175. For the larger aircraft the E2-195 is where the focus seems to be and deliveries are expected to start in 2018.
Meanwhile the E-175 has caught on, especially with US-based regionals. Its large cabin “feel” and the large windows make it a passenger favorite. Moreover, as these regionals fly ever longer stages, cabin appeal becomes very important. The improved E-175 has attracted new customers like Alaska.
In summary we note with interest Embraer’s building order backlog in the 100-130 seat segment. These are not the kind of numbers Mr. Leahy gets excited about. After all, Airbus or Boeing soon will each produce single aisle aircraft equivalent to Embraer’s annual orders in one month. But for Embraer these numbers are great – and we expect them to grow handsomely once the E2 achieves EIS. The world has ordered 775 E-170/5 and 922 E-190/5s. We do not believe Airbus or Boeing would turn down orders of 60 of their A319neo or MAX if they were desired. But the market doesn’t want them. That does not mean there is no market.
Finally, here is Embraer’s backlog. You can see why 2015 Orders look good for Embraer. They are not in the high volume segments where Airbus and Boeing claw at each other for every order. Where Embraer trades there is also a tough and competitive duopoly, and it is a space where the competitors make a living without the rancor.