Embraer recently announced another E2 program milestone with their third E2 prototype making its first flight. The company is generally out of the public eye, being based in a quiet city in Brazil. But the firm develops world-class products. Its current E-jets are popular worldwide, serving both regional and mainline airlines.
Like Airbus and Boeing, Embraer decided on an E-jet program refresh. Unlike Airbus A320neo and Boeing 737MAX, this refresh was a lot more than a re-engining. The E2 has new wings and numerous other advances. It is as close as one come to developing a new aircraft while staying within the grandfathered E-jet design. This is quite similar to what Boeing went through when it redesigned the 737 Classic into the 737 NG.
The E-jet program is a major success for Embraer, and took them from only regional jets into both regional and mainline operations. The E-jet program has seen over 1,200 aircraft delivered, including 191 E170s, 350 E175s, 540 E190s and 149 E195s. The current backlog for E-jets will add another 233 aircraft prior to the transition to the E2 models. The E-jet program offers Embraer an solid customer base on which to develop its new E2. Essentially, there will be 1,463 opportunities to replace their own aircraft.
The backlog for E2 as of 2Q16 was 267. The E2 program does not have an E170. While it is still early in the program life cycle, the current backlog split favors the larger models. In the E2 backlog, the E175 has 37% share, compared to 44% share for the E-jet (E170+ E175). It appears the focus on the E175-E2 was spot on as it looks like taking the place of the previous two models.
The current E175 has proven to be popular among US-based regional airlines and recently won business at mainline Alaska Airlines. Unfortunately for Embraer, current US scope clause limits the E15-E2 from regional service. The scope clause limits have not impacted orders for the E175, which has been the best seller in this segment. Two thirds of the E-jet backlog are E175s.
A comment about scope clause: We understand from a pilot union that scope growth is “off the table”. This may be the present position. However, positions between airlines and unions are negotiated. Scope has grown before and, eventually, it will grow again. This growth, according one regional airline executive, will likely be sufficient to accommodate the Mitsubishi MRJ and E175-E2. The only question is when this occurs. Could is happen within the next five years? Airlines will want to deploy the best technology aircraft they can and this is likely to drive scope growth negotiations. Since the E175-E2 and MRJ are going to be available by 2020, the next scope negotiations may start by 2018.
In a typical single-class layout, the E175-E2 was extended by one seat row, compared to the current generation E175, and will seat up to 88 passengers, while the E190-E2 keeps the same size as the E190, with up to 106 seats. The E195-E2, compared to the current E195, will grow three seat rows and will accommodate up to 132 seats.
In terms of the larger E2 models, backlog numbers show greater interest in the E195-E2 than E190-E2. The E190-E2 has the same capacity as the E190. Embraer says this is what its customers want. The E195-E2 has more seats than the E195, offering customers capacity growth, which seems to have caught on. The E195-E2 also has better payload (+19k lbs) and range (+400NM) than the E195.
Embraer constantly talks about how they listen to their customers. The E190-E2 is the same as the E190 because this is what customers asked for. The E195-E2’s growth offers customers an aircraft with slightly better capacity and considerably greater range/payload. The E2 backlog at 2Q16 was equivalent to 22% of the in service E-jet fleet.