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December 11, 2023
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Embraer’s commercial aircraft division is going to be rebranded as Boeing Brazil.  This is big for Brazil and also for Boeing.  As we have written before, this may be big for both firms, but the impact could not come at a better time.  Boeing’s need for talent has never been more apparent.  Embraer‘s design and development teams are ready for their next project, having completed the E2.  The timing is exquisite.

As reported by The Air Current, Boeing’s NMA is not stable.  The MAX is the primary cause and because the MAX will take more time to fix, the NMA is going to keep struggling.  Already during the last Paris show colleagues were talking about a possible best path forward at Boeing was to stop MAX and go headlong for the NMA and FSA.  This thinking was informed by the briefing by GE’s David Joyce.  He had as many questions about the NMA as anyone else and his position was the same the previous year at Farnborough.  If the NMA was cloudy to GE, then it was cloudy for everyone.

Out of this murkiness, it is clear that Boeing needs to make some radical choices and decisions.  The MAX has proven to be a very costly project when it was supposed to be exactly the opposite.  Fixing the MAX to get it flying again will remain priority #1.  But hot on its heels has to be a replacement.  It is hard to imagine the MAX has a long future.  But in making the tough decisions, Boeing’s leadership has to be cognizant of the lessons from both the 787 and MAX. 

Essentially Boeing Commercial (BCA) has to accomplish three things: Fix MAX, define and move on NMA and also define and move on FSA.   This is tough to do while smarting from the 787 and MAX fumbles.  Boeing as we know it will struggle with this.

Which is why Boeing Brazil comes with exquisite timing.  The Embraer team has designed, developed and delivered fourteen programs in fourteen years!  And all were on-time and on-budget.  Has anyone ever done this before?  This data point is overlooked by a lot of people.  If Boeing Brazil is given the FSA program, the pressure on Boeing declines big time.

BCA can focus on getting MAX back into service knowing the FSA is being worked on simultaneously.  That buys the combined company useful time.  The NMA also can continue to be developed and focus on the market from 180-250 seats.  As matters stand now, Airbus is taking the entire 180-240 seat market unopposed.  That’s not good for Boeing and not good for Airbus, either.

What does Embraer offer?  Take a look at how the Brazilians have transformed their business from a builder of regional jets into a supplier of 100+ seats commercial aircraft.

Over the past fifteen years, Embraer has successfully moved into the small airliner market.  Doing so, it beat its initial competitor Bombardier.  The latter responded with the right solution but was unable to execute on its own.  Embraer today trades with major airlines, not just regional airlines.  This may seem like a small matter – but it most definitely is not.  Big airlines have a low-risk tolerance.  Trading with them means you have met their risk profile and they can rely on you.  This year Embraer’s E-190 and E-195 (sold to big airlines) account for 33% of its deployed fleet. Embraer is well placed to work on a project that seats 150-180 passengers. Doing this kind of project as Boeing Brazil is not a stretch. Hard work for sure, but the Brazilian talent has the skills and is ready.

As Boeing faces some of the darkest days in its 100-year history, there is a ray of light peeping through.

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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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