Embraer’s re-entry into the bigger biz jet market will be disruptive

Embraer has no immediate plans to return to the upper end of the executive jets market again and compete directly with Gulfstream, Bombardier, or Dassault. But if it will, it will come up with something disruptive that’s different from the competition. President and CEO of Executive Jets, Michael Amalfitano, said this recently during Embraer’s Media Days in Brazil. Embraer's re-entry into the bigger biz jet market will be disruptive. The Brazilian airframer used to cover the mid to big-size business jet segment with its Legacy 450/500 and 600/650, which were based on the ERJ 135 and ERJ145 regional jets. Production of the Legacy ended in 2015 after thirteen years. The 450/500 were succeeded by the Praetor 500 and 600. Further upstream, Embraer offered the Lineage 1000, which was based on the E190 commercial airliner and offered since 2007. It was still on display at the 2019 Dubai Airshow, but Amalfitano confirms that the Lineage is no longer available citing the restricted range of the Lineage as the main reason. Although it had a range of 8.500 kilometers, the competition with their dedicated business jets could offer more. This leaves Embraer with only the market of small-sized executive jets covered with the Phenom 100 EV and 300 E, and the medium-segment with the Praetor 500 and 600. Asked if Embraer has any plans to re-enter the high-end market again, Amalfitano said: “We have an upstream and downstream strategy. What do we want to do below the Phenom 100 that is a strategic fit for our brand? Let me think about Eve now (the eVTOL program), a unique brand that is wholly sustainable and 100 percent electric. What can I do between that and my 100? We will analyze that downstream market. I like “Blue Ocean’ and rather be disruptive instead of going where anybody is.” “When I go upstream, there is an interesting transformation going on. If you look at the Praetor, once we came out with it, what you see happening at Gulfstream and Bombardier and what you are going to see happening at Dassault, they have to do something to their products that are above the Praetor. We are taking share away because our Praetor 600 can do everything a Challenger 650 or Falcon 2000 can do. That’s three cabins on their aircraft versus two on ours, but our airplane beats it on performance, technology, and comfort. So they are now reacting to our Praetor.” “So your question is: when is Embraer going to do something in this segment? When I can disrupt what they are doing with a product that doesn’t exist. What we will bring to the marketplace has to be disruptive. Just like we were the first to bring the Ka-band to mid-sized aircraft, or the lowest cabin altitude, fly-by-wire with active turbulence reduction. Larger airplanes that cost $35 million more have it, we brought it down to smaller aircraft. So think about what those airplanes don’t have that Embraer has in its family of products that we can bring to the marketplace and disrupt going upstream, is something that will capture market share and customers.” Interior of the Embraer Phenom 100 EV. (Embraer) Phenom Embraer is quite satisfied with its current product range, with a backlog that is sold out until Q3 2024. The Phenom 100 EV is the third iteration of the entry-level jet segment that the airframer created. “It is a perfect opportunity for those folks who can buy an airplane and fly it themselves in a safe, sustainable, and reliable manner”, says Amalfitano. The 300 E is the “leading aircraft, best-selling, most-delivered light jet for ten years. That is a decade of dominance.” The type has the number 1 market position with a share of 31 percent and a strong presence in the fractional market, in which aircraft are owned by companies who rent them out. One of the biggest operators is NetJets. A new version will become available in the third quarter: the med. This is the medical evacuation version to transport patients and organs and can be used for humanitarian relief. Embraer is working with Corporate Angel Network which offers public charity flights to cancer patients. The first aircraft is under construction right now in Fort Lauderdale. With a supplemental type certificate, the current 300s can be converted into the medical version. “We are not going to give up our space in the light-jet space”, said Amalfitano. “We will always continue to innovate and evolve that product and do it in a disruptive way. So instead of saying what the competitor brand is having, we will try to leap to the future saying: ‘what does the marketplace not have and how do I bring it to this product?’ It will be very exciting to see where this growth is coming from.” The Praetor 600 currently has a 20-percent market share but that is growing, notably with corporate departments. (Embraer) Praetor That also applies to the medium-size segment, in which Embraer offers the Praetor 500 and 600 since 2018. The first aircraft was delivered in 2019. Embraer claims it to be the most technology-advanced mid-sized aircraft in the category. Amalfitano admits that the Praetor still has a lower market share, but is on-trend to capture more. “The Praetor 500 is close to thirty percent and the 600 has twenty percent and is growing. They are getting great traction in the fractional marketplace, with FlexJet being the primary provider for the US. The 600 is strong in Europe and is now starting to penetrate corporate flight departments. Brands that used to buy our competitors are now doing fleet conversions and buying the Praetor 600. We have active campaigns that already have been won but haven’t been announced. Once they will be, you will see names that will make you think ‘OMG, look at who is buying.’ We will see continued growth in both fractional and corporate departments.” Sustainability Executive aviation and business jet sales have soared during the pandemic, as the growing number of billionaires in the world has been able to afford a private jet. And they preferred to fly privately instead of through cramped airports with all their Covid restrictions. This has also attracted criticism from environmentalists (but not just them), who think that those using private jets don’t care about the environment and climate change. Embraer is aware of these discussions and developments. At EBACE in May, the airframer and 4Air announced a complementary carbon offsetting program to customers of the Executive Care program. It is a small step toward achieving carbon-neutral operations by 2040, but Embraer acknowledges that the availability of sustainable aviation fuels (SAFs) in general and executive aviation, in particular, is going at a slow pace. Just an artist's impression, but this is what executive travel could look like in the future. (Embraer) When Air France-KLM recently revealed it is working on a new La Premiere/First Class product for entry into service in 2024, Group CEO Ben Smith said that the airline is responding to growing demand from passengers who used to travel on business jets but now prefer commercial airliners for sustainability reasons. Asked if Embraer is seeing this trend too, Michael Amalfitano said: “If I am in an Air France-KLM seat or any other airline, I would try to create opportunities that those customers don’t leave me. So you are going to see all those airlines trying to figure out how to create stickiness for those first-class, high-end customers. But we aren’t seeing anybody saying “I’d go to commercial aviation and rather fly there than here’, that’s not happening. I think it is complementary. Those same customers that have a corporate jet may choose to fly in their First Class over the long-distance and use their private jet in their regional scope.” Long-term, Embraer’s executive jets will benefit from new technologies that will make them sustainable. The Energia technology program that was launched last year includes SAF, electric, hybrid-electric, and hydrogen that will be developed for all of its aircraft over nine seats. From the Eve Urban Air Mobility program might evolve a new type of executive aircraft, of which Amalfitano showed a concept artist impression during his Media Days presentation. “Today, we have the right products, but we are investing in the future to have products that haven’t been even created so that we can continue to evolve the ecosystem.” That's what Amalfitano probably means when he refers to being disruptive as it comes to the next biz jet.

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