March 25, 2019, © Leeham News: Boeing last week announced the executive leadership for the joint venture with Embraer, the as-yet unnamed company that is generically called NewCo.
Separately, Embraer announced the departure at the end of next month of Embraer’s parent CEO, Paulo Cesar, a move that was expected.
Cesar was with Embraer for 22 years in various positions. We was president and CEO of EMB’s Commercial Aviation division and launched the E2 program in 2013.
Heading up NewCo will be Marc Allen, who is currently president of Boeing International. He was named SVP of The Boeing Co. and president of Embraer Partnership and Group Operations. He reports to Boeing CEO Dennis Muilenburg.
Sir Michael Arthur, currently president of Boeing Europe and managing director of Boeing UK-Ireland, succeeds Allen.
John Slattery, who is president and CEO of Embraer Commercial Aviation, was named president and CEO of NewCo, subject to ratification by the JV’s new board of directors after closing.
The JV was approved by the government of Brazil in January. It’s now going global for anti-trust approvals, which are expected by year end.
I don’t know Allen, but I’ve known Slattery approaching 20 years. Aside from holding him in high regard on a personal and professional level, I wrote shortly after the JV plans were announced that Boeing should name Slattery as president of the new company. Boeing really does not know the business in which the EJet plays. It also doesn’t know the commercial aviation services business that Embraer created to support the EJet. Slattery and his team do.
That said, Slattery has significant challenges ahead.
Sales of the E2 really haven’t taken off as well as would have been liked. Part of this is because fuel prices, which were high in 2013, are much lower now. The price hovered between $100-$110bbl in 2013. Eighteen months later, it was down to $45. A year later, it bottomed out at under $25. It’s around $57 today. The demand for this highly fuel efficient airplane dried up.
Another reason: the US market, with the crushing pilot Scope Clause contracts at the Big Three carriers, limits the weight of the airplanes regional partners can fly to 86,000 lbs MTOW. The E175-E2 comes in at just under 88,000 lbs. (So does the competing Mitsubishi MRJ90.) This restriction means Embraer can’t sell its E2 to US airlines. (The E175LR E1 does comply, but it has older engines.)
Finally, potential orders stalled while the industry waited on the outcome of the Boeing-Embraer JV approval. Although Brazil OKd it, global approval is still pending. As with the Airbus takeover of the majority interest in the Bombardier C Series, the market waited until all approvals were received. Then Airbus announced nearly 180 orders and options within days.
Slattery has said he expects a lot of E2 orders once the Boeing deal is closed. Since this isn’t expected until year end, this might mean missing some good PR at the Paris Air Show in June.
There’s little more Slattery enjoys than a good challenge. This means he’s got an exciting year ahead of him.
Do you foresee any significant diffusion of people/thinking more generally between Embraer and Boeing Scott? Perhaps a refresh of Boeing following the MAX issues.
@Woody: Embraer has a lot of talent to bring to the table. Boeing’s own arrogance probably thinks it knows best.
Yea, they are still insisting the MAX MCAS was fine and nothing behind the curtain.
Oh, by the way you get the light now and the AOA display for free, but nothing to see here folks, just keep moving on.,
Maybe oddly what shook a lot of faith in their engineering was the fact they could not assess what kind of improvement an A320NEO would get.
A couple percent yes, 10% plus? PHew
More telling is how badly they estimated their own performance improvement for the MAX.
I remember Boeing types telling me years ago that if Boeing’s performance estimates were off by more than 5% (positive or negative), they considered it a failed estimate.
Yep, 3% is on the edge, they usually get it down to 1 or 2%
How much was driven by desire to kill?
All data can be twisted around to get the result you want (A380 anyone?)
Look at Opel.
Every time GM management threw their weight around
market share dropped. GM siphoned of all IP to some offshore entity, let Opel pay fantastic amounts for using their own IP and finally closed the place. uneconomic!
Expect the former Embraer to be hollowed out and close down.
Opel wasn’t closed, it’s now a part of the Pugeot-Citroen group, so it still needed to be part of a far larger automotive group. Anyway Boeing is only a JV partner of Embraer not the owner, and Boeing needs their IP as it hasn’t built a new narrow body since the ‘new engine , new wing’ 757 of 1982.
Uwe assume Boeing would know intellectual from stupid.
No, Boeing would walk in a beach with gold nuggets and pick up the Pyrite.
Apparently the merge doesn’t move as fast and decisive as Airbus /BBD.
Still, I feel it is a very good idea, even strengthened after the MAX drama.
Embraer offers a viable, lean <150 seat option with PW GearedTFans' It is 6t (!) lighter than the 737-7. That ripples down in all costs & efficiencies .
Short term it could prevent e.g. SW putting the money where their mouth is (A223).
I appreciate the fly hanging on to the tail section of the Embraer. Love this site being an aviation enthusiast.
Years back we got a cat we could not come up with a name for.
The Vet Finally named it Nuevo Gato. So he became, New New (Nu Nu and other variations )
I’m kinda surprised that Embraer doesn’t find a way to somehow reduce the MTOW of the E175 E2 by those 2,000 lbs. Would limiting the fuel by that amount reduce the range so drastically?
That has occurred to me as well, loose 1800 lbs or so someplace but its a tough go on an aircraft.
7 lbs a gallon, That is 285 gallons.
Climb is a given so it takes it right off from cruise range.
Last jet I was in I could see the flow rate was a Lear and it was like 1800 lbs per hour. I can’t image it would not cut at least an hour off the flight time.
@Matth: the range would reduce to about 800 miles.
Roughly 1.5 hours?
@Scott “reduce TO about 800 miles”
Did you mean “reduce BY about 800 miles”?
Reducing the weight isn’t an answer, as coming to market soon is the MRJ70 which has GTF engines, the same fuselage cabin cross section as the E series and is scope compliant with a range up around 2000nm.
E2 has GTF engines
Point is, Embraer could cut a section, reduce weight and have a 70 seat in short order.
Run less fuel, down rate it, combinations of the above.
A shorter E175 is almost the same as the E170 ( 2 rows shorter) which isnt made anymore.
The differences in basic weight between the 2 versions seemed to be only 750kg.
This really was a strategic error. Yes, they were hoping for the dcope clauses to be lifted/modified, but making the E175-E2 one row shorter would not have been a major compromise — and it would have given them an excellent scope clause-compliant aircraft in case they were not.
Mitsubishi was making that calcultion, I don’t know what Embraer was thinking.
Under Boeing they will be much slower to react (grin)
China has just confirmed a 300 airbus order worth $35 billion of A320s and A350s what a blow to Mr Boeing.
Don’t think it is a blow to Boeing particularly – these big orders tend to be roughly balanced out between the the two over the longer term, it’s just A’s turn this time – B announced a 300 plane order when Trump visited China last year.
Yep, once the MAX is back in the air China will make a big order.
They came late to the table on their stuck in the mud 5 year plan and getting aircraft is iffy (including their own made ones!)
“Boeing Secures $15.7 Billion Vietnam Orders During Trump’s Hanoi Visit”
These sorts of things are often ‘re-announcements ‘ of previous commitments at airshows etc.
China has a centralised airliner ordering system for the mostly state owned airlines, so the block order gets announced and when the allocation to which airliner is decided it gets announced again.
For trade reasons, China needs to order something like Boeings ENTIRE OUTPUT just to make a medium shift in the trade imbalance.
Does Embraer bring anything new to Boeing in terms of technology?
From a layman’s point of view, I’d say the most valuable part of Embraer for Boeing would be it’s very cost effective design and development capabilities.
If I remember correctly, the E2 has advanced FBW that Boeing could use.
Yes, and with the software developed by Embraer.
Maybe not in unique technology but Southwest needs to start replacing 500 737-700’s and you can see them all but cancelling their small -7 order. And it didn’t get better.
If I was Boeing, I wouldn’t test their eternal 737 loyalty and discuss the E195E2. Airbus no doubt will do an aggresive A220-300 offer.
Seeing as Boeing has a full FBW system I don’t get the comment that Embraer is bonus.
Low cost skilled group yes.
Boeing can shift their center of New Aircraft Excellence to wherever Embraer calls home.
That will make sure things go smoothly in development and production.
Good point, I forgot about the FBW on the 787.
Not trying to talk down on Boeing, but after a few weeks of updates and articles about the MAX (and it’s rather obsolete FBW), I’d almost forget Boeing does do state of the art airliner technology too.
“That will make sure things go smoothly in development and production.”
How much would you say Boeing’s secondary motive would be keeping Embraer out of Chinese control?
Embraer is not that large, but has everything Comac lacks. I’d imagine if Comac had a JV with Embraer the C919 would be in much better shape.
Boeing did FBW on the 777 25 or so years ago.
The 737 isnt really a FBW , its is a ‘fly using cables’, but the Max has electronic actuated spoilers which are sort of FBW
Some structural parts of Embraers E jets are made in Everett/Seattle.
Its a myth that they are largely made in Brazil where the final assembly line is.
Embraer’s advantage is that has embraced more completely to be an airframe designer and system developer and only an assembler of sections made by others in plants all over the developed world.
Embraer also has assembly plant for the Business Jets in Florida I believe.
Need or desire for size fluctuates in the industry.
Demand and strategy, including fleet commonality though SWA is now huge so probably not as concerned as a small operator.
And range can be a factor as the -700 is lighter, SWA may start flying to HI.
Boeing tried to sell small airplanes decades ago when it purchased deHavilland Canada.
The notion was that it was engaged with 737 operators who had routes that might use Dash 7s and Dash 8s. (I suppose might replace PW’s CV640 turboprops.)
IIRC that didn’t turn out to be so in the near term, and deHavilland’s factory was in worse condition than Boeing realized.
Of course today there’s the ‘regional jet’ category that a later owner of deHC pioneered with its RJ, Embraer’s small airliners are a version of that category, which has speeds and routes similar to 737s and A320s.
Better check out E195-E2 specs. Has little do with the Eighties Embraer and BBD RJ’s.
De Havliand Dash 7 and 8 were Turbo Props as well.
Pretty limited market if you read total production .
And regional is a mainline in all but name.
Embraers other mistake (deliberate) was not making the E2-195 big enough.
Be instead to see if they can stretch it and compete with the A220.
first flight E170 feb 2002, EIS mar 2004
first flight CRJ100 may 1991 EIS 1992
They are much closer in ‘age’ than you think, but 26 yrs ago isnt that old for current airliners.
> first flight CRJ100 may 1991 EIS 1992
One year between first flight and EIS. Wow, they used to hustle through those test flight programs.
“On October 19, 1992, Lufthansa CityLine received the world’s first Canadair
Regional Jet ”
those were the days before FBW