Leeham News and Analysis
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Leeham News and Analysis
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- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
Embraer 2020 results
By Bjorn Fehrm
March 19, 2021, ©. Leeham News: Embraer presented its full-year 2020 results today. Revenue for 2020 was down 31% at $3,771m versus $5,463m in 2019. The resulting loss was $323m, compared with $77m 2019.
The company managed to stay cash neutral with $2.8bn at exit 2020, the same as when exiting 2019. Due to the uncertainty of how COVID-19 develops during 2021, there was no 2021 guidance.
Commercial aircraft
The Commercial Aircraft division delivered 44 E-Jets during 2020 compared with 89 for 2019, Figure 1. The E175 is still the aircraft with more than 10 deliveries, but the rate is less than half that of 2019. Only 11 E2s were delivered during 2020.
Figure 1. Commercial jet deliveries. Source: Embraer.
Commercial aircraft revenue was down 50% at $1,114m versus $2,234m for 2019. Revenue per delivery is steady at $25m per aircraft.
With the COVID-19 pandemic hitting the airliner industry, the firm order backlog development between 2019 and 2020 is interesting. Backlog 2019 stood at 338 E-Jets, end 2020 down to 281. The E175 delivered 32 aircraft, but the backlog shrunk from 181 to 132 jets, 17 firm orders canceled. The 190-E2 lost five orders while the E195-E2 increased the backlog from 137 to 139 aircraft.
The company is talking with partners to join a 70 to 90 seat turboprop program based on a lightened E-175 fuselage, paired with new wings, engines and empennage. The launch is planned for next year.
Business Aircraft
The Business jet side had its light segment (Phenom 100/300) hold up quite well with 56 deliveries compared with 62 for 2019. The larger jets dropped more at 30 versus 47, Figure 2.
Figure 2. Business jet deliveries. Source: Embraer.
The ratio of margin richer large jets is 35% compared with 43% for 2019. Segment revenue was down 23% at $1,072m versus $1,397m for 2019.
Defense & Security
Embraer has delivered four KC-390 airlifters to the Brazilian Air Force and is preparing five aircraft deliveries to Portugal over the next years. Hungary ordered two KC-390s during 2020 as the second NATO country to buy the type. Segment revenue was up 14% at $654m vs. $576m for 2019.
Services and Support
Services revenue shrunk by 26% at $920m vs. $1,246m for 2019, due to all the grounded aircraft not needing spare parts or service.
These E jet figures aren’t bad at all (relatively speaking).
Backlog went down 16.8% in 2020 (44 deliveries and 17 cancellations).
For the 737 MAX, backlog shrank 25.3% in the same period (zero deliveries, 1116 cancellations / ASC606 deletions).
https://www.nasdaq.com/articles/boeing-737-max-orders-finally-start-to-flow-2021-03-14
KLM is very happy with the E series, and is ordering more. It currently has a fleet of 51.
Shines light why Alaska sticks with B737 MAX?? Drip drip drip …
https://mobile.twitter.com/dominicgates/status/1372565456108724225
“To close the 2016 acquisition of Virgin America, Boeing gave Alaska a $400 million loan, secured by existing commitments to buy the 737 MAX.”
Back in 2011: CFM’s Sandrine Lacorre, product marketing director, who said at a UBM Aviation conference, “What we can’t do technically, we will do commercially.”
^^ Deals, finance etc
No wonder McB has to borrow so much if it’s handing out “sweetener loans” like this in an attempt to steer airlines away from Airbus.
It was already a discount store, and now it’s become a pawn shop too.
Huge contrast between BA and Embraer:
– Embraer managed to stay cash neutral thru 2019 & 2020;
– BA’s net debt jumped from $6 billion to $56 billion.
https://finance.yahoo.com/quote/BA/balance-sheet/
Here’s the equivalent page for Embraer (except that 2020 hasn’t been added yet).
Note that Embraer’s debt was steadily decreasing in the 2017-2019 period, whereas BA’s was increasing in the same period (before exploding in 2020).
https://finance.yahoo.com/quote/ERJ/balance-sheet?p=ERJ
The Virgin merger … it looks so bad now.
And Hawaiian must be so happy with the 787 now.
Leon:
I don’t see the Virgin merger as anything but a plus for AK in picking up another network that had little if any overlap with theirs.
And good deals for them with MAX and the divestiture of the A320.
The 787 story will be interesting to follow.
Boeing will pay for it if there is impact and its good timing as there are plenty of spare aircraft to fill in with.
It may be that while the quality sucks they have a time spread to fix it if there is a recall.
A lot of 787 in service so we have to see how this evolves impact wise.
It may wind up a Wing Fork thing they can fix over time and just cost them (more) money.
Or a fairly fast fix, no disagreement its another black eye and reason to clean the whole Boeing management and board out and start over.
@ Leon
On the subject of the Hawaiian 787, the first one just rolled out of the Charleston paint shop.
Apparently, it won’t be delivered until 2022. I wonder why? 😉
https://twitter.com/BoeingSCSpotter/status/1373249753983684609
Bryce: I guess that is what I get for assuming they had some in service.
Good spot!
Hawaii has tighter Covd control so I can see a hold off on delivery.
And of course that pesky issue as to how many have quality build issues and correcting.
Just goes to show, engineers can do fantastic and management can wreck things far faster than they can be fixed.
One reason I just quit, what I thought prior could not get worse did and it was time to bail out if you could (I could) – others, not. Poor blighters.
I knew people that had bad work environments, but Toxic is a big step up and when they actively are stabbing you in the back, you stand no chance.
With regard to the new program launch alluded to in the article, Reuters is reporting this:
“Embraer hopes to announce new product partnership soon, says CEO”
“While Gomes Neto did not specify which new products are involved in the discussions, he has said in the past that the company hopes to develop a new turboprop plane but that it cannot do it alone.
Reuters first reported last year that China, India and Russia were considering partnering with Embraer.”
https://www.reuters.com/article/us-embraer-results/embraer-hopes-to-announce-new-product-partnership-soon-says-ceo-idUSKBN2BB15T
So, just as McB screwed up with Bombardier (and pushed it into the arms of Airbus), it now seems that they’ve effectively pulled off a similar effect with Embraer (by pushing it into the arms of other BRICS countries — including some “nasties”). A sort of “reverse King Midas effect”.
Bryce:
Don’t disagree with the merit, what I disagree with is that a new turbo prop has any viability.
Its a Kludge job using a 175 hull to start with.
At best it kills off DH and you still have ATR owning the field.
Embraers issue is they have no where to go.
Their best bet is still a join up or merge with Boeing on the 5X if that sees the light of day (hey its business, you are smart not to shoot yourself in the foot)
AK Airlines has closed down a lot of Q400 routes and shifted to Embraer jets. People just do not like TPs.
Alaskan are aviation nuts as well as depended. Lots of prop jobs. AK Airlines had a Q400 on the Anchorage Fairbanks route.
They have shifted that to a E175. They have almost as many E175 as they do Q400.
The Q400 is an ideal Western US Turbo Prop with its high performance, hot and high ability, few if any route restrictions with engine out (drift down issues) and they are shifting to E175 as much as possible.
That is the TP in a nutshell, its going away though probably not entirely gone.
Alaskan routes are now all other the continental US, most are not suitable for TP or the competition are using RJ
In Montana they serve Kalispell, Missoula, Great Falls, Helena, Bozeman and Billings.
Kalispell ( regional pop of 90,000) only connects to Seattle, 375 miles away, now thats operated by Horizon using a Q400. Thats what you would expect
From what I can see the Fairbanks to Anchorage are 1 hr E175 flights , that immediate regional population is 95,000.
Its not clear why one would be RJ while a similar route is TP, I presume its competition as Fairbanks is a hub for more longer distance flights
Duke: Its temping to try to compare routes by distance only, but distance is not the only aspect.
Underlying it is Fairbanks to Anchorage is a route, but Fairbanks through Anchorage onto Seattle, points West Coast, Texas (can you say oil) and Hawaii is a standard as well. No idea what the traffic break down is but Alaskan are traveling fools (well and its O deg F this morning, no sun in winter and …….)
They flew jets on that route dating back to the 60s when the 737 came out. Even flew it on a 707 AK had on lease or some such from Pan Am! (still had the Pan Am belt buckles)
Fairbanks tends to -4o F in the winter. Coming from Hawaii???? Yea, you get the picture, meet me with my Arctic Parka but I don’t want to pack it with me.
So there has been a standard set for lo many years and people did not like the TP and they did not like walking out (or in) to -40 or worse let alone Anchorage while warmer with some wind blowing,,,,,,,,,,,
Also the prop jobs are on the far end of the terminal and a pain to get to the concourse (up stairs)
So AK relented and while its not longer a 737 it is a jet and uses the Jetways and …….
Other locales happy to have any service but its expected with jet standards Anch to Fairbanks or back.
People have no problems with turboprops. They don’t like tight, noisy, high-vibration aircraft that fly at low altitudes, in constant turbulence.
E3 is a proposal for something with the level of convenience of E2, something quite different.
The ATR-72-600 and Dash 8-400 (Q400) have vibration and noise dampening. From this standpoint, they’re not bad. Seat width is cramped and overhead bin space is miniscule, though.
EJets and ATR/DHC are not comparable in terms of safety feeling and passanger convenience.
Caerthal: These weren’t the questions addressed. The questions were about noise and vibration.
How fast could Embraer’s TP be and if it’s same fast as the A400M, how much more fuelefficient would it be than the E175E2?
Otherwise if the E175E2 is flown much slower, same as a TP, how much more fuel would it need. Embraer is showing payload-range curves at different speeds.
An E195E2 with TP and A400M speed might be more interesting.
A400M a large TP military freighter with swept wings has about the same
cruise speed as the E195 anyway. Just doing a slightly faster Q400/DHC8 would be pointless.
Its all a PR stunt to make it look like they are doing something
“Its all a PR stunt to make it look like they are doing something”
Although that qualifier could certainly be applies to BA’s endless talk of an NMA/NSA, we’ll just have to see how serious Embraer is about doing an JV with another BRICS country.
Both China and India have very high population densities, but still have relatively isolated rural areas, so each is an ideal market for short-hop flights. Perhaps the Chinese will suggest an LH2 TP partnership — which would achieve many purposes simultaneously. Who knows?
What we do know is that BA has absolutely nothing to offer Embraer.
Maybe Collins Aerospace (Utas, Pratt, Collins, BEA) ?
Collins could do the engines, cockpit, systems, interiors, landing gears.
They want to be less dependent on Boeing programs in civil aerospace.
China has their own TP in the making.
I don’t see any press saying its a huge TP market.
No where close to stuff China route wise, but Jet image and or the rail system may trump it.
Image wise to JV with someone else? Only on the 929, the medically induced 939 and the 929 is failing as its a JV with Russia and that is a poisonous relationship
keesje:
All those players were in on the 919.
Had nothign to do with Boeing.
China wants to have nothign to do with anyone in civil or any other aerospace endeavor (including Russia so that is truly bizarre but Russian has both tech and certification’s they want)
Unfortunately they canb’t just buy it and you can see the result of dealing with the Russians is going badly. The Russians want to benefit from their efforts. Marriage not made in heaven.
China just tried to buy a Ukrainian jet engine mfg because they had the ability to design (and materials capability) jet engines.
Ukraine just nationalized it to keep that from happening.
China wants the whole enchilada but you have to put the time and resource into basic science and they do not want to wait.
So they buy trainer jet engines from Ukraine and Russian jet engines for the fighters if they want them to do what they designed them to do.
“The company is talking with partners to join a 70 to 90 seat turboprop program based on a lightened E-175 fuselage, paired with new wings, engines and empennage. The launch is planned for next year.”
Will the “new turboprop” have the same Scope clause issues with US pilots
How do you lighten the metallic fuselage? Maybe aluminum litumium, but that will be minor weight saving
Scope applies, but no one involved in scope uses DH or ATR anymore.
Might be some feeders for the scope types but those would be non branded stand alone.
Only one I know of US that flies TP to any degree is Horizon and those are 76 seats, and that is about all you can do, they are tight even at that. AK is not a scope agreement airline.
Why AK ala Horizon went with the 175s I don’t know, also 76 seat but 3 class.
Weight wise the DH/Q400 is under the scope.
“lighten the metallic fuselage”
The E series is a double bubble with baggage underfloor, unlike all other turbo props ( or even competing CRJ and MRJ regional jets).
They would have stick to a single upper bubble
This would be a complex and foolish solution. Simply copy the solution adopted by your competitors in the lower segment. The E3 aircraft will have a much higher speed and ceiling, it will not be a patched ATR.