Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: New engine development. Part 23. Development risks. September 6, 2024
- If a strike occurs, here’s what Boeing can do September 5, 2024
- China banks on C919, but numbers say it still needs Boeing September 2, 2024
- Bjorn’s Corner: New engine development. Part 22. High Turbine technologies. August 30, 2024
- The A330 for medium haul or twice the frequency with A321XLR? Part 1 August 29, 2024
Bullish Embraer sees backlog reach 7-year high in 2Q24 results
By Leeham News Team
Aug 8, 2024, © Leeham News: Embraer presented a strong set of results for 2Q2024 on Thursday, with a jump in aircraft deliveries pushing the Brazilian planemaker’s order backlog to a seven-year high.
Revenues totaled $1.494 billion in the period — an increase of 67% compared to the previous quarter, with the commercial aviation division achieving revenue growth of 176% over the prior three months.
Embraer delivered 47 jets in 2Q24, including 27 executive jets (20 light and seven medium), 19 commercial jets and one of its multi-mission C-390 Millennium transport aircraft. Collectively, that amounted to an increase of 88% versus the 25 aircraft delivered in the first quarter.
For the commercial division, aircraft deliveries were up 12% year-on-year, although defence deliveries were flat and business jets were down 10%.
Global sales
The broadly positive results for Embraer follow a Farnborough Airshow in which the world’s third-largest civil aircraft manufacturer failed to announce a single commercial order.
Commenting on the state of play during a call with analysts, CEO Francisco Gomes Neto said: “We had a good start to the year with orders from American Airlines [a firm order for 90 E175s, with purchase rights for 43 additional jets] and Mexicana [Mexico’s state-owned carrier has ordered 20 E2 aircraft — 10 E190-E2 and 10 E195-E2 jets], and we are working on a lot of sales campaigns in all the regions of the world.
“We are confident that we will [announce] good deals soon … and we have a good expectation for Q3 and the rest of the year. We believe we have a very good chance to fill out production slots for the years ahead in line with our strategic plan.”
Indeed, Embraer is expected to end the year in a strong position. The company forecasts commercial aviation deliveries of between 72 and 80 aircraft, and business jet deliveries between 125 and 135.
That should see total company revenues reach the $6.0-6.4 billion range, with an adjusted EBIT margin between 6.5% and 7.5%, and adjusted free cash flow of $220 million or higher.
Neto said: “We see challenges but at this point in time we are confident that we will be able to deliver the guidance for the year.”
E2 expansion
Neto was also asked to comment on reports that LATAM Airlines was considering expanding its regional fleet with an order that could include the E2.
“At this point we are talking to a lot of customers about E2 opportunities,” he told analysts. “We see a great opportunity to increase the E2 presence in Brazil.”
Indirectly referencing order backlogs at rival planemakers that have pushed delivery timelines to the end of the decade, he said that while Embraer’s order list was growing, opting for the E2 “can help airlines in Brazil and everywhere add capacity quickly to their fleets.”
Embraer’s backlog stood at $21.1 billion in 2Q24, more than 20% higher year-on-year. That is largely down to commercial aviation, where there was an increase of $227 million.
On the defense and security side, there was a decrease in the value of the orderbook, falling by $251 million.
The backlog for the other two business units increased only “marginally” (up by $45 million), Embraer said.
Revenues
In terms of revenue, for Embraer’s executive aviation unit, the figure totaled $335.5 million, a decrease of 11% year-on-year, due to what the company said was a mixture of “lower number of deliveries and product mix”.
Higher C-390 volumes pushed revenues within the defense and security division to $187.2 million, around 130% up on the previous year.
Commercial aviation revenues amounted to $553.5 million, 17% higher year-on-year.
Adjusted EBIT was $138.8 million during the quarter while reported EBIT improved to $127.9 million in 2Q24, from $73.2 million in 2Q23.
Embraer said this was down to “higher profitability” from its services and support, which provides technical support and component services.
Seems like all the OEMs are doing well except the one HQd in Washington DC.
Will the K-street connections be enough to keep the latter,
moribund outfit in the mix?
Changes coming to Boeing… Time will tell on that…
Interesting to see E2 sales increasing. You would think the piolets’ unions in the USA would allow the E175-E2 since passenger size-wise, it is the same model as the old one but with the new GTF. At some point Embraer might not take orders anymore for the older model.
Funny how we only see the one Boeing basher post on this but all over the new CEO and how awful he is for showing up on the shop floor!
Save the post on Boeing for a Boeing subject?
I would agree on the E2-175 but the Unions won’t budge. I would love to see it come into US service (or any service but it was the US market it was build for – others go for E2-190/195
No question the E2-175 is a one for one replacement. Its the number of pax it carries that is relevant.
The E175-E2 isnt same size as old E175. As the US airlines have shifted their cabin layout to First- Economy-plus- Economy they needed extra space to keep at the 76 seats, so its an extra frame or so in length, The wing is modified as well, some changes to the FBW system
The problem isnt the US pilot unions holding up a simple weight increment to cover the E2, its the airlines want alter a whole string of other conditions at the same time as the weight jump- essentially to be able to fly more regional jets
There is no problem taking orders for the old model as its compliant with the CO2 limits set by ICAO. The reasons are the regional jets special treatment meant only had small changes needed , which Embraer did with some aerodynamic tweeks giving a lower fleet fuel consumption per seat km
@ Vincent
Good question.
Contrast this with the situation over at that other sinking ship:
“Earlier this year, S&P Global Ratings raised Embraer’s rating from “BB+” to “BBB-” and maintained a stable outlook. According to S&P, Embraer’s strong cash generation allied with higher aircraft deliveries, cost reduction, and efficiency measures led to free cash flow in 2023 which was considerably stronger than the company’s guidance to the market. Fitch Ratings also revised the company’s BB+ with a positive outlook, while Moody’s raised the rating to Ba1 and maintained a stable outlook.”
https://newsroom.aviator.aero/embraer-extends-us-1-billion-syndicated-credit-line-for-five-years/
Excellent news for little Embraer that builds amazing reliable/efficient airplanes…. All FBW aircraft BTW.
This was another failure of Calhoun, he cancelled the brokered two company partnership in 2020 as well as the NMA.
And don’t get me started with possibilities of the same relationship with Bombardier.
Biggest challenge for embraer is becoming a bigger company. They have relatively low production rates. They have lot more room to grow with their current product before directly competing against the B737 and A320
Embraer seems quite well positioned to me.
@Vincent
Expanded output means new factories, new employees, new suppliers
In my time in aerospace I have seen a lot of recalls for bad design but I have especially seen a proliferation in recalls for quality control
Thanks for that info, since I’m an observer not in that industry.
Casey:
The problem is that there is a market outside the US for the E2-190/195, but not one in the US.
Porter is the only one picking them in North America up and they are Canadian of course. Their location allows them to reach all the US but that is Canadian traffic, not cross US.
Out in the rest of the world they compete with the A220 (more so the A220-200). In that case range is an aspect. Even if you don’t need it, the ability to carry fuel and bypass a fueling or fueling in some locations is a bonus. Or they go with 737/A320.
China and India would be the only other land mass population centers along with Europe who has trains (as does China of course). India lacks infrastructure and locked up in its Bureaucracy.
None of those areas nor Africa is buying a lot of Regional jets (pretty much and only Embraer these days). Some Turbo Prop competition as well.
So the bigger market is and always has been the US. We got that big empty gap in between population centers.
And that is a good market but limited by scope clauses so down to E1-175. And what the ruling on its emission come 2028? I suspect that is why you are seeing those buys now.
Embraer is in a box though they may manage it that its a livable box but its not going to be a big box. I wish them all the best, they build good airplanes but I don’t see it as a major growth area past what they are doing now.
come the downturn we are seeing the indicators for and …….
The FBW for Embraer is new, E1 had some FBW and some not, like the MAX.
Good move to make all FBW.
As I recall they had one near bad crash that was a result of elevator rigging issues. Incredible the crew managed to fly it at all.
That said the crew ignored the warnings and did not run the test that would have told them it was rigged wrong.
Any pilot knows first shot out of maint you gotta be even more alert and the check was SOP not an out of maint check.
FBW is you don’t know how it works and use the tools is no panacea.
Yea its good to see Embraer working.
Boeing should have gone through with the merger. I saw that in the 80s in a downturn. Cumming engine Co. kept full on development and testing of engines (we had a new one at the time and I got to go to one of their classes)
Embraer is better off not under Calhoun but Ortberg would be (at least hoping) a whole different reproach.
What does Montour Pilot say about loss of commonality?
Look it up?
No worse than the MAX with the other Boeing lineup.
The 787 and 777 have a common type rating.
I believe the 767 is not and the MAX for sure is not.
So no worse than Airbus has with the out of commonality A220. As Mentour noted, it basically means no future development off the A220 (sans the sort of planned 500)
Loss of commonality only applies to Airbus? 🤣
Didn’t you know?
Embraer’s FBW aircraft have full commonality with the pre-historic, cables-and-pulleys, EICAS-less embarassment being produced up in WA 🙈
At least the A220 and A320/321 both have FBW and EICAS/ECAM…
No one said that.
Airbus has long touted commonality. No issues with that and it does not have to be FBW to be so. Its true now.
DC-9 was not FBW and it was a very successful series of aircraft.
The reality is that A220 has not commonality with Airbus, doesn’t matter its FBW, how its programed is completely different.
Nor can the A220 be made common (well it could at the cost of a new aircraft)
Boeing has had some of that (in fact started it) but clearly the MAX is so old school (which I love) and nothing can be common to it. It was started in the era of my beloved Steam gauges and that is where it still is at.
Reliaolbiy dispathc wise favors the 737 by a bit. You get into serious eleconrics and the gremlins are hard to trace at times.
The staranar practis is to replace the box. Problem quits, yippeee, jus to come bakc again and again and again.
A number of Airbus crashes are for that exact reason, it was not fixed, it kept coming back until it bit someone.
And the posters know that EICAS was implemented without any reserach into confirmting or dehying it did any good. It just was the next cool thing to have a computer screen for.
Modern is not better. There are not standards for electronic cockpits, so its the wild wild west.
Back in the 737 day there were standards. Gauges had to be laid out per spec and systems had to work per spc.
Now anyone with FBW has a different Auto Throttle ops because there is no spec.
Airbus, BBD, Boeing, Embraer all implement it differently. So you gotta build the bird to a standard but you have none for the stuff that tells it what to do. Simply stupid. There should be a standard and spec for all of it.
Same thing with alarms, bells, whistles. None of it works, just some yahoo idea of what they think it will work with no basis of fact.
So anyone that thinks its some kind of magic wand does not know what they are talking about.
A320/321 isnt 100% FBW
The rudder control is using a legacy system
Only on the new A321XLR will the rudder control be FBW and their 41 types of different flight envelopes a plane could be under …LOL
https://www.flightglobal.com/air-transport/airbus-switching-a320neo-family-from-mechanical-to-electronic-rudder-control/143203.article
Duke:
Thank you, I missed that. Some interesting aspects of all the various evolution’s of FBW, ground breaking in the US for the F-16 and then moving to Airbus.
One must differentiate between how a flight surface is moved and how the surrounding protection system works.
The FBW backstory for Airbus is defined by the German VTOL projects ( all fully analog FBW ) Concorde, mirage (III) V , … )
Very first FBW aircraft was the Avro 707C in 1956, not digital of course – but did use sidesticks !
Where did you get the idea German VTOL were the fore runners ?
I think it was also included in Avro Canada CF-105
“The two-seat Avro 707C (WZ744) joined the RAE in January 1956 and was involved in substantial research into the development of fly-by-wire control systems. This was the first aircraft of its kind to be fitted with a side stick controller and it was still flying in September 1966, when it achieved its full airframe time and entered enforced retirement.
https://www.baesystems.com/en/heritage/avro-707
Will be interesting to see the E3 models. They can add 4+3 row seats to the E2’s thus adding 28 seats, increase range a tad, modified wing, landing gear, brakes, APU and engines while keeping cost low below the A220-300 and thus outproduce Airbus.
I am skeptical.
The fuselage form current goes from the E2-175 (not in production) to the E2-195. Its 4 seats per row not 5 or 6.
While I am not an aircraft engineer, at some point you exceed the basic fuselage design to extend it and I suspect the E2 has done that. Also the loading consideration with 4 seats (maybe not a problem) .
New wings have been done so any change there is another major cost and of course no gain if you can’t extend the fuselage.
The big markets is the US regional s and the E2-175 would have to loose a lot of weight.
I am sure Embraer is looking at that but there may not be a good answer. Different engines and maybe a fuselage reduction. But then have you lost what you gained?
Or a upgraded/new engine on the E1-175. Go go an E2-170 lenght?
And then you get into the weight trade offs and is the E1-175 better or so close as to not make it worth it?
Somewhere in there is the aspect of the scope and the higher weight giving longer range and the Unions not wanting that impinging on what would be a A220/MAX/A320 area of ops.
Tough nut for Embraer in that regard. Sure they are cranking out and selling E1-175 nicely. I have seen conflicting views on if the engine is allowed after 2028 (all those advance orders….) GE says it is but I have seen no regulatory ruling.
E-175 is compliant after 2027. Embraer has said so as they made the small
airframe changes necessary for better fuel burn( hence lower CO2-seat -km) not GE. The RJ had an easy path as ICAO didnt ask anywhere near the improved fuel burn seat km that the single and double aisles had to meet.
“Embraer and Rheinmetall are Discussing a new C-390 Training Center in Europe”
“Embraer and Rheinmetall are in discussions to expand their training network with a focus on the C-390. The aim is to evaluate the needs of the increasing number of C-390 European customers with respect to training and decide on the development of a dedicated training center in the region, supporting existing and future C-390 customers.
Currently, there is an Embraer C-390 Training Center in Brazil, in the state of São Paulo, featuring a Full Flight and Mission Simulator (FFMS) and a Loadmaster Training Station, where Brazilian, Portuguese, and Hungarian Air Forces C-390 crews have their initial training. Embraer and Rheinmetall aim to analyze ways to increase proximity with their current and future C-390 customers to ease the training for pilots, loadmasters, mechanics, and additional crew members.”
https://www.defenceturkey.com/en/content/embraer-and-rheinmetall-are-discussing-a-new-c-390-training-center-in-europe-6069
Nice to see the increasing interest in the nifty C-390 👍
Airbus should just drop the A-400 and get a production agreement on the C-390.
Lots of C-130s gonna be replaced by C-390s, too.
I am impressed the C-390 is doing pretty good.
I would have thought the C-130J would pretty well crush it and it has not.
It may well be that the appeal of jets vs turbo props is a factor and Airbus missed the boat going with the TP A-400.
The C-17 sold pretty well outside the US by transport standards and that is a $200 million bird. If Boeing could have made low rate work it might still be selling.
Problem with a military procurement, the receiver wants the full fleet as soon as they can get it and there are economics of scale to do so, but then the program is done and you can’t get any more even if you wanted to.
C-130 has managed to thread a needled over the years of just enough to keep going. Congress has played a major part there but it also has ensured its there when they needed to replace older models. The J is seriously modern upgrade and while it looks the same nothing in common with early C-130.
‘The Airbus A400M Atlas which began deliveries in 2007 is said to have been the reason Boeing wound up its C-17 Globemaster production line by 2015.
Richard Aboulafia, vice president at Teal Group Corp., an aerospace consultancy, said Airbus’ … newer, cheaper turboprop transport, the A400M Atlas, is undercutting the C-17.”
That’s why competition is good. Let the captive customer pay the ransom.
Well you can believe that if you want.
The C-17 was never intended for export. The C-142 and the C-5 never sold that way (did you know there was a civilian designation for the C-5 in case it did? – I had to look that one up when I saw it on a hangar print)
The C-17 and the A-400 are two different markets. Its not sold well regardless. UK operates C-17 and A-400 (and dropped the C-130 much to the annoyance of the UK service members)
So RC is full of baloney. He has some very good observations and he has his share of busts.
The C-17 sales took place on the tag end of producible when countries realized it had an outstanding capability and Australia realized it suited them to a T, followed by others.
Boeing in fact built white tails knowing there were some orders in the discussion.
The only reason the A-400 is still in production is they never met any of the production targets and its a low volume over cost air frame. Kazakhstan got first choice because the buying consortium is happy to defers it as long as they can.
France bought 4 of the C-130J to refuel helicopters. Ahh those evil Yankees.
Pretty funny that a less capable aircraft at $188 million is better than a 200 million.
I sure would hate to be stuck in that noisy thing for 15 hours.
Reality is that the A-400 falls between the C-130 and the C-17. UK went with the combo of C-17 and A-400. France bought C-130s.
And we won’t talk about the many contract (ahem) adjustments that Airbus could not deliver on the program and had to get more and more subsidies (funny how the US can’t do that but Airbus can)
The C-390 is a direct competitor for the C-130 and its interesting to see it succeed. Maybe the people buying it don’t like noisy props either!
Maint wise I would rather have two jet engines that 4 Turbo Props. Props and hubs take a lot of maint and with a jet engine, well you just pull it off every once in a while, put your spare on and run the whole thing through a rebuild. V2500 has good reliability and even in a rougher service longer than a TP which still has to be pulled and overhauled.
Efficient wise the TP is better but that has to offset the other costs. The A-400 should have been jet powered. Two big engines vs 4.
Lol. In 2015, Australia announced to buy two C-17s at a total cost of US$770m*, far more expensive than unit price of “200 million”.
The C-17 is powered by four* P&W TF engines. The development of C-17 was plagued with delays, cost overrun and technical failure, it got so bad that the Pentagon once threatened to end the program.
Beset by problems including faulty wing construction, cost overruns and an outdated design system, MD had to stomach a loss of $1.5 billion. Apparently reporters would rather seek RC’s comment, who else called him as “full of baloney”??
While normally not worth a comment back, in this case its a factual error whether its deliberate or just lack of knowledge????????????
In this case, there would have been a support package that went with the sale of the C-17s.
Boeing had also built white tails and the production was down to 1 a month.
The contract may have included support for the other C-17s.
But a C-17 on your airfield is worth far more than an A400 not built.
Australia like britain doesnt use ‘unit cost’ from the manufacturer, but the ‘system cost’ including any new facilities built, the longer term maintenance contracts and overhauls
The GST at 10% upon delivery is also charged, depending on the story source the $770 many be lower value A$ rather than US$
@duke
It’s reported as a deal worths A$1 billion (US$770 million). Sigh.
You believe Australian government incl 10% GST for offshore military procurements?? The GST is charged by the seller (if the seller is an Australian GST registrant.) You can’t be serious!!! 😒
You dont understand many things , add VAT or GST to the list
The tax is added to the price the buyer pays once it crosses the border …ergo the Australian defence department
As for the unit price paid to Boeing
“June 19/12: One more. Boeing receives a $169.8 million firm-fixed-price contract for 1 USAF C-17A replacement aircraft. Boeing has confirmed that this contract is for the USAF.” [probably delivery a year or 2 later]
https://www.defenseindustrydaily.com/last-of-the-globemasters-the-usafs-final-orders-05283/
A few years before the Australia top up buy the UASF was paying US $170 mill for one. In a time of low inflation no way a few years later are they 2 for US $770 mill unless thats a longer term system cost rather unit price per plane
Embraer in talks with Indian government to set up manufacturing facility in India, in return for increased market access.
https://m.economictimes.com/industry/transportation/airlines-/-aviation/brazilian-aerospace-company-embraer-in-talks-with-govt-for-tieup-but-seeks-market-access-for-its-jets/articleshow/112411870.cms
Its worth noting that NZ has taken the first of its C-130J.
They would be a country that I would think the C-390 would work well for. So there are a lot of trade offs involved.
Airbus
Fly-by-wire (1980-1987)
“One of the A300-600 and A310’s notable innovations had been the introduction of electrical signalling on secondary flight controls, replacing the web of cables and pulleys tradionally used. Béteille wanted to take this evolution further with the next Airbus aircraft – to computer-driven digital “fly-by-wire”, in which the deflections of the flying control surfaces on the wing and tail are no longer driven directly by the pilots’ controls, but by a computer which calculates exactly which control surface deflections are needed to make the aircraft respond as the pilot wishes.”
Pedro:
Than you for the cut and paste we all had access to and have read
Putting in assessment of how Airbus implements it, the bump control aspect of how they do it , envelope protection except when its not, there in lies assessment and take on good or bad.
I have driven bump control equipment. I don’t care for it, I prefer Rack and Pinion type with feedback and modulation.
There is a LOT more to FBW than Airbus implements it. They have a view, but there are all sorts of ways to program and build controls that use FBW. Airbus in fact in my opinion is somewhat crude.
There is not feedback. Their auto throttle do not move, you can’t tell by feel what the setting is.
There are not regulations on how FBW needs to work so each mfg invents their own take on it.
Airbus, BBD (what you have on the A220 just for refresher their) Embraer, Comac, Russia (who knows how many variations)
Fighters go with maximum performance and whatever it takes to try to do what the pilot wants.
FBW is not some single magic wants, its the wild wild west for how you apply it.
Trans….
Nice post. Its interesting that the public perception of FBW is one of it being the gold standard and always better than mechanical flight controls. Its just different. Solid robust mechanical systems are not less safe than FBW systems. Both systems are subject to wierd unànticipated failures. The A320 crash in Mumbai happened when the crew misunderstood the autopilot and flew the bird into the ground thinking it would capture the ILS….. Mechanical systems can develop odd handling traits because they arent as tunable as FBW and adjusting mechanical linkages is a black art of sorts. Even with all of the background noise about FBW or not, The SR71 used a mechanical flight great effect. Yes, the subject isnt well understood……
Poster confused FBW from F-16??
Embraer scores a nice order in Australia. No idea why the E2-190 vs the 195, but a sale is a sale and a nice one.
https://www.flightglobal.com/fleets/embraer-scores-order-for-eight-e190-e2s-from-virgin-australia/159547.article
https://aviationweek.com/air-transport/aircraft-propulsion/airbaltic-adds-airbus-a220-order
AirBaltic Adds To Airbus A220 Order
August 13, 2024
AirBaltic has converted options for 10 additional Airbus A220-300s as the airline seeks to lay the groundwork for further growth toward the end of the decade. The options stem from a 2023 Dubai Airshow agreement, which also included firm orders for 30 aircraft.
They must really hate those awful P&W engines!
Nice score for the A220
Delivery from second half of 2025. Still has production slots freely available?? Hmmm..
Related:
OTOH
Virgin Australia’s Boeing 737 MAX are delayed
Bloomberg:
“The airline told staff on Friday that 31 of Boeing’s Max aircraft it has on order won’t arrive on schedule, the report said.
Virgin’s delivery schedule for some of the Boeing aircraft expected to begin next year has now been delayed to 2026, according to the report.”
Between the apparent economic slowdown and BA’s inability to deliver, maybe Airbus
can out of generosity make some A32Xs available?
I do need to make a note before I get jumped on it.
The correct designation for the Embraer is E-XXX-EX. It rolls off so awkward that I have changed my posts to E2-xxx as that covers it.
That of course begs a question that it should Be A900-350.
Re-use of the E aka E1/E2 just does not roll off the keyboard the same.
Anyone have a hundred million or so, lying around, and want to start a small airline?
https://www.ch-aviation.com/news/142603-gtlk-europe-liquidators-put-five-a220-300s-up-for-sale
GTLK Europe liquidators put five A220-300s up for sale
Stored. Never flown.
‘VP-BJB (msn 55056), VP-BJC (msn 55057), VP-BMQ (msn 55073), VP-BMV (msn 55066), and VP-BMZ (msn 55065) are all 2019 builds but have never been flown commercially. They are currently stored in the Netherlands (four at Maastricht and one at Enschede) and are to be sold on an “as is, where is” basis.
The liquidators of the Irish SPVs of Russia’s GTLK – State Transport Leasing have put five A220-300s up for sale that were originally due to join Red Wings Airlines (WZ, Moscow Domodedovo).’
The problem is you have to get the engines re-mfg due to that era of serious problems.
No spares to be had. The new GTF have corrected those issues but those are going on curretn deliveries.
A lot are in re-mfg but there is a backlog. Those aircraft would be appealing when the backlog clears and you can get them up to the current standard.
Delta will be checking them out, or maybe Air France
A startup would be the worst place to begin with previously stored planes
I like the idea of Delta. If anyone knows how to deal with used aircraft its them (ie the MRO ops they have as well as experience with their own varied fleet).
Also the A220 is a fit and they have kept their operating (it would be fun to see an article on how they pulled that off)