If approved by the government, the JV must be approved by the US, European Union and Canada. Given that the Airbus acquisition of 50.01% of the Bombardier C Series program sailed through the US, EU and Brazilian approvals, there’s no reason to expect the Boeing-EMB JV won’t be approved.
Either way, Embraer’s backlog appears to be in much better shape today than it was at the beginning of the year.
Following the Farnborough Air Show, EMB now has nearly 1,100 orders, options and letters of intent for all models of its E1 and E2 jets, according to the Ascend data base. Airfinance Journal’s Fleet Tracker lists 438 of these are firm orders, split between 199 E1s and 239 E2s. (AFJ’s tally includes 24 E190-E1s for JetBlue, which Ascend does not. JetBlue opted to order the Airbus A220-300; the E190 order is expected to be canceled.) Figure 1 shows the customer base.
Although the E-Jet backlog is at this point dominated by options and letters of intent, most historically become orders over time.
With more than 300 orders, options and LOIs announced at the air show (only some three dozen actually firm contracts are the time), there is a lot of room for Embraer to bolster the order book by year end.
There is some weakness in the customer quality.
Wataniya Airways of Kuwait ceased operations this month in what it says is a temporary shutdown. Press reports indicate this is a three month government suspension of its operating license while reforms are undertaken.
The Trans States order includes 50 for the E175-E2, as are 100 orders by SkyWest. These don’t comply with US Scope Clause requirements—the planes exceed the maximum weight limit in the Scope contracts. But if Scope contract changes aren’t made, the E2 orders may be converted to the E1. The net result is the same, but this does speak to a weakness in the E2 skyline.
Figure 2 illustrates the production requirements, including all orders, options and LOIs.
Embraer’s historical production rate has been 96 per year. By this metric, the production line is oversold through 2023 and about even in 2024.
EMB has to up the annual production rate if the options and LOIs become firm contracts or hope that not all will become solid orders in the early years. The other solution is juggling the skyline, moving some airplanes “to the right” and hoping for some deferrals.