Embraer’s improved E-Jet E2

By Bjorn Fehrm

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December 07, 2017, © Leeham Co.: Embraer is four months from first service introduction of the new generation E-Jet, the E190-E2, with Norway’s Wideroe. Following the smooth E190-E2 program will be the larger E195-E2 in 2019.

Embraer’s E2 update of the E-Jet is more elaborate than the Airbus A320neo and Boeing 737 MAX updates. In addition to new engines, the aircraft’s wings and systems are changed. In addition, the fuselages are stretched on two of the three models for increased passenger capacity.

We analyze the areas of change from the original E-Jets and what these mean for the operations and economics of the aircraft.

  • The E-Jet E2 keeps the strong point of the original E-Jet, its comfortable cabin, and improves other areas to keep the family competitive after 2020.
  • As the only aircraft family in the market (regional or mainline), the E2 models E175, E190 and E195 all get their own optimized wings. The result is good field and range performance paired with low fuel consumption.
  • The E2 family introduces advanced Digital Fly-By-Wire to allow reduced static stability and by it trim drag. This improves the fuel consumption further.
  • Other system changes focus lower maintenance costs. The new single-aisle generation (A320neo, 737 MAX) lowers maintenance costs per seat. The regional OEMs must respond.

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CSeries effect on Airbus, Boeing product strategies

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Nov. 6, 2017, © Leeham Co.: Boeing took a pass on assuming ownership of the Bombardier CSeries, according to a report in the Toronto Globe and Mail—the same deal rival Airbus took.

In doing so, Boeing passed on acquiring a new airplane program at pretty much zero risk, no cash investment and no research-and-development cost. The market demand ranges from 4,000 to 6,000, depending on whose study you believe.

Rival Airbus wouldn’t have a response and, given its current turmoil, would have been unlikely to pursue a response.

Instead, Boeing may embark on a risky, high-cost development of the New Midrange Aircraft for which market demand remains a controversy, suppliers are reluctant to take risk-sharing positions and which will almost certainly provoke a response from Airbus.

Artist concept of Boeing 797-7. Source: fs2000.org.

  • Boeing says it’s not worried about Airbus stake in CSeries program; it remains satisfied with its product strategy.
  • But 100-160 seat sector won’t be covered by a 737 replacement. Airbus has this covered with CSeries.
  • New Midmarket Airplane figures into CSeries impact.

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50% increase in CSeries sales forecast–but what does this mean?

Nov. 1, 2017, © Leeham Co.: For years, Bombardier forecast the 20-year market demand in the 100-150 seat sector as between 6,000 and 7,200, depending on the year of the forecast.

Airbus in 2014, the last year the OEM segmented the sector in its 20-year forecast, predicted a demand of 4,363 aircraft.

Boeing, which hasn’t publicly segmented the sector, is believed to have forecast a demand between 4,185 and 6,275 in 2013, based on information revealed during various executive presentations. The mid-point was 5,230.

In announcing the acquisition by Airbus of 50.01% of the CSeries program, Airbus CEO Tom Enders cited a 20-year demand of 6,000 aircraft.

Bombardier consistently claimed it would capture 50% of the demand it saw, or 3,000 to 3,600 aircraft, over 20 years.

But the numbers don’t match up.

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Suppliers conference in Mobile focuses on US aerospace sector in Southeast

Click on image for an enlarged, crisp view.

Oct. 31, 2017: A new event, the Southeast Aerospace and Defence Conference (SADC) scheduled for June 25-27 in Mobile (AL), will examine the commercial, defense, space and corporate aerospace sectors in the US Southeast.

The conference is organized by Airfinance Journal and Leeham Co., the first joint venture between the two companies.

The US Southeast is a growing aerospace center. Defense and space clusters have decades-long histories in the Southeast. Corporate and commercial clusters are more recent developments, albeit in some cases now well within a second decade.

Airbus’ A320 family Final Assembly Line in Mobile opened in September 2015. The FAL is producing 3.5 A320s per month and will reach its initial target of 4/mo by year end, slightly ahead of schedule. There is land capacity to expand to 8/mo.

Earlier this month, Airbus and Bombardier announced that their new venture will establish an FAL in Mobile.

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Assessing Alaska Air Group’s fleet requirements

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Oct. 27, 2017, © Leeham Co.: Alaska Airlines Group (AAG) acquired Virgin America (VA) and with it, Virgin’s exclusive fleet of Airbus A320ceos with orders for A320neos and A321neos.

With Alaska Airlines (AS) being an all Boeing 737 operator, the question immediately arose: what will AAG do with the Virgin fleet.

AAG CEO Brad Tilden strongly hinted the Airbuses will eventually go away. But on earnings calls, officials say they’re studying the matter and there’s plenty of time before they must decide since the first leases don’t begin rolling off until 2019.

Even if AAG decides to consolidate around the 737—an issue still very much in doubt—it won’t be any time soon.

The A320 leases continue to 2024. The leases for the new A321neos go longer: these are 12-year leases and they are non-cancellable. The A321neos will be around at least until 2030.

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Bombardier upbeat on CSeries deal, but Moody’s sees higher risk of debt default

Oct. 26, 2017, © Leeham Co.: Bombardier and Airbus put a positive face on the former’s acquisition of 50.01% of the CSeries program, but Moody’s credit rating service wasn’t impressed.

The agency downgraded Bombardier’s already poor credit rating and changed the outlook to Negative from Stable.

Moody’s changed the “Corporate Family rating (CFR) at B3 from B2, its probability of default rating to B3-PD from B2-PD, and its senior unsecured rating to Caa1 from B3. The company’s speculative grade liquidity rating is affirmed at SGL-2. Bombardier’s rating outlook has been changed to negative from stable,” it announced Tuesday.

“The downgrade reflects our expectation that Bombardier’s leverage will remain high through 2019 and its ability to generate positive cash flow in that year has headwinds related to the potential delay of C Series plane deliveries,” said Jamie Koutsoukis, Moody’s analyst.

The press release may be found here.

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Boeing-Embraer venture in response to Airbus-Bombardier? Don’t count on it

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Oct. 23, 2017, © Leeham Co.: With the tie-up announced last Monday between Airbus and Bombardier for the CSeries, speculation immediately turned to whether Boeing and Embraer will join forces in some fashion in response.

The speculation is natural. Boeing and Embraer have had several commercial agreements, mostly on the defense side but also in eco-research. But as yet, there hasn’t been a tie-up involving the successful E-Jet program.

Embraer E195-E2.

Don’t look for anything soon that would be a meaningful response to the Airbus-CSeries deal.

  • Boeing needs a response in the 125-150 seat sector in which the 737-7 MAX languishes and with which the CS300 competes.
  • Boeing has no product offering in the 100-125 seat sector. Embraer doesn’t need Boeing’s help here. The E175-E1 continues to sell and it meets US Scope Clauses.
  • The Embraer E2 program’s first delivery is April next year.
  • Embraer isn’t about to proceed with a new airplane program in the 100-150 seat sector, which is Boeing’s product gap.

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Assessing the Airbus-Bombardier deal

Oct. 17, 2017, © Leeham Co.: The Airbus-Bombardier transaction announced yesterday has implications well beyond the United States, which has been much of the focus of analysis post-announcement.

The analysis focused on the US is natural, given the Boeing trade complaint involving the CSeries sale to Delta Air Lines.

But it’s important to step back to see what this means for CSeries.

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Pontifications: Playing catch-up

Oct. 9, 2017, © Leeham Co.: Recent weeks have been dominated by the news of the Boeing-Bombardier trade complaint. More is to come before and after the end of the year.

It’s time to catch up on some other news.

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American wants to decide A350 fate within six months

Sept. 28, 2017, © Leeham Co., Grapevine (TX): American Airlines would like to decide within six months what it will do with its order for 22 Airbus A350-900s, a left-over deal from US Airways before the latter acquired the former.

Derek Kerr, EVP and CFO, told LNC on the sidelines of American’s investors/media day here in a Dallas suburb that the A350s were intended to replace US Airways’ A330s. The airline ordered 22 of the airplanes.

American, however, selected the Boeing 787-8/9 for its mid-size, long haul fleet, ordering 74 42. The new American deferred delivery of the A350s to 2020 and Kerr said a deadline is approaching to decide what to do with the order.

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