DBEA55AED16C0C92252A6554BC1553B2 Clicky DBEA55AED16C0C92252A6554BC1553B2 Clicky
February 24, 2024
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Embraer announced its 2021 year-end results this morning. Like all these calls, there is a desire to make the best of the situation and be upbeat.  But in the case of Embraer this may not be wishful thinking.  

  • 2022 guidance is deliveries of 60-70 commercial aircraft and 100-110 in executive aviation. Moreover, Embraer believes their bottom line should be positive in 2022 after a loss of $29m in 2021
  • Embraer is considering a 2-3% increase in prices during 2022 with the mix geared to lighter aircraft such as E-175 (no surprise since it has a monopoly in this segment) and Phenom (the best seller in its light business jet segment)
  • Its eVTOL project Eve is the global leader already and this lead is so strong it may continue as the market leader for some time

The Embraer we are familiar with today is in the midst of a phase of substantial change.  Whereas we might have seen the aerospace company remain “as is” had the deal with Boeing go through, the rejection of that deal has given the company an opportunity to switch gears and change up its business.  Embraer is showing its resilience and ability to pivot and this is due to the effective deployment of its staff.  That talent is what Boeing wanted, and probably needs now more than before. 

Embraer is developing a new line of aircraft that will be either electrically powered or utilize hybrid power. This demonstrates a strength – even though critics will point out that much of the announced information is short on details.  Bear in mind that anyone talking about a next-generation, like Airbus, are all light on details.  Much of the technologies have to be developed and certified.  If Airbus warranted kudos for their sharing a future product offering, Embraer deserves as much. 

Airbus, it should be pointed out, is also involved with eVTOLs, but is far behind Embraer’s offering in terms of orders and commitments.  We suggest this reflects the market’s belief that Embraer can and will deliver on its eVTOL Eve.

In terms of its current aircraft, the recent announcement of starting a P2F program on the E190 and E195 is an excellent move.  This fleet is reaching the right age for freight conversions.  Moreover, with the E2 in production, early E1s are likely to be at optimal capital costs for freighter conversion.  The E1 freighters will be much more efficient than anything in the same payload capacity.  In taking E1s out of the market as passenger aircraft, Embraer encourages customers to move to their E2s.  Since the E2s offer excellent economics, just as fuel prices rise, the timing works.  Moreover, Embraer can deliver a crossover jet faster than Airbus, and delivery slots are becoming a precious commodity.

Finally, we offer you a look at our newest OEM model developed to show E-Jet activities.  The model has seven pages; please remember to click the double-headed arrow at the bottom right to optimize viewing for your monitor. 

Some notes about the model:

  • Page 1: Shows orders and deliveries by model and year.
  • Page 2: Lists the backlog and readers can select the models to see the backlog for each
  • Page 3: Orders & deliveries split by type, regional, or crossover. Although the regional market is the largest, there has been growth in its crossover products. Crucially, Embraer has a monopoly in the regional segment which is why, along with inflation, it is considering a price increase.  Unlike single-aisles at Airbus and Boeing, its E175 is not subject to commodity pricing
  • Page 4: EJet transactions show market liquidity.  We also list the customers, countries, and models.  Note the high concentration in the US market, which is E175 centric.
  • Page 5: EJet production and status. Notice that E190 and E195s from the 2005 era are targets for P2F.
  • Page 6: EJet by operators and lessors. 55% of the leased fleet is at three lessors – the ideal place to start with the P2F program?
  • Page 7: EJet production from a different viewpoint.

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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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