Embraer CEO talks about risks

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Embraer CEO Paulo Cesar Silva. Photo: AINOnline via Google Images.

June 22, 2015, Paris Air Show, © Leeham Co. Embraer has emerged as the#3 commercial aircraft producer over the years, behind Airbus and Boeing and overtaking Bombardier, by approaching risks carefully and conservatively. No other decision in recent years reflects this approach than what to do when events outside its control forced officials to decide what to do about the future of the E-Jet. Bombardier launched the CSeries with a new design and a new engine. The larger of two models, the CS300, was a direct challenge to Airbus and Boeing and their smallest aircraft. Airbus responded with the New Engine Option family, forcing Boeing to react with the re-engined 737, the MAX. With the smallest CSeries, the CS100, a competitor to the largest EJets, the E190 and E195, Embarer had to do something. The question was what. Embraer could launch an entirely new, larger aircraft, following the Bombardier example. It could do a “simple” re-engine of the EJet. Or it could do something else. Officials chose to stay away from confronting Airbus and Boeing with a CS-300-sized EJet. Instead, they drew the line at 133 seats in highest density, adding 12 seats to the E-195. The Pratt & Whitney GTF was chosen to power a fundamentally new airplane, one with new wings, new systems, aerodynamic upgrades and other improvements. We met with CEO Paulo Cesar de Souza e Silva at the Paris Air Show to talk about EMB’s approach to global risk factors. Summary
  • Oil prices, over-ordering and over-expansion by airlines factor into Embraer’s market assessments.
  • Airline focus on market share rather than profitability is bad decision-making.
  • Asia is Embraer’s best opportunities today.

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