Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Airbus 1Q2024 results: Airbus CEO: “A350 in-service experience drives positive reputation and orders” April 25, 2024
- A350-1000 or 777-9? Part 3 April 25, 2024
- Boeing CEO promises company is turning around…again April 24, 2024
- Solid start for stand-alone GE Aerospace despite cuts to LEAP output April 23, 2024
- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
Embraer goes for growth after ‘solid’ 2023
Subscription required
By Tom Batchelor
March 18, 2023, © Leeham News
A strengthening order backlog and an uptick in deliveries helped Embraer turn a profit last year.
In a call with investors as the company outlined its 2023 earnings results, Francisco Gomes Neto, president and CEO of Embraer, said commercial activity had “intensified” over the last 12 months, with “solid demand” across its markets.
Unsurprisingly, Embraer has felt the effects of supply chain delays buffeting the entire industry (though it said not as acutely as in 2022). The company still managed to deliver a total of 181 jets, up from 160 in 2022.
Of those, 64 were commercial aircraft, 115 were executive jets (74 light and 41 medium, helped by the strong performance of the Phenom 300) and two were military C-390s. E2 family deliveries more than doubled year-on-year, from 19 to 39 in 2023.
The recent firm order from American Airlines for 90 E175s, with purchase rights for 43 additional jets, had resulted in a “great start to 2024”, Neto added.
Revenues totaled $1.975bn in the fourth quarter and $5.269bn across 2023, which was 16% higher than in 2022 but at the lower end of the guidance range for the year.
In 2023 as a whole, the company reported adjusted EBIT of $350m, with adjusted EBIT and EBITDA margins of 6.6% and 10.7%. Adjusted EBIT stood at $181.7m in 4Q23, with adjusted EBIT and EBITDA margins of 9.2% and 12.8%, respectively.
Looking ahead to 2024, Embraer said total company revenues would sit in the $6 to $6.4bn range, with an adjusted EBIT margin of between 6.5% and 7.5%.
Outlook 2024: Embraer’s continued recovery
Subscription required
By Bjorn Fehrm
January 8, 2024, © Leeham News: Embraer was hit by a double whammy before and during COVID. The non-closure of the merger of Boeing’s and Embraer’s Commercial Aircraft Divisions and the halving of its E-Jet deliveries during COVID. The year that passed marked the recovery from the extra cost and effort of the non-merger and an increase in E-Jet deliveries and orders.
It was also a progress year for the EVE eVTOL venture, with Embraer finalizing design and starting prototype production. Despite the EVE lagging behind other programs by about a year, the customers believe it’s one the most viable programs. Eve doubles the preorders of the nearest competitors.
The past year will also be seen as the break-trough year for the KC-390, Embraer’s bet to replace the venerable Lockheed-Martin C-130 military airlifter. The customer list went from three to five, with more country air forces in serious negotiations for the KC-390.
Summary:
- The E-Jets are trending back to normal volumes with better margins.
- EVE is the best-selling eVTOL, as operators trust Embraer’s knowledge and support.
- The KC-390 is on its way to capture a big slice of the C-130 Hercules replacement marker.
Embraer’s EVE brings some reality to UAM/eVTOL sector
Subscription Required
By Scott Hamilton
Dec. 18, 2023, © Leeham News: There are hundreds of “alternative energy” concepts under study for commercial aviation and a new air taxi industry. Most will fail to prove technically feasible or obtain the funding required to successfully bring the ideas to market and production.
A few concepts are based on reality. EVE is one of them.
EVE is an air taxi concept floated by principal owner Embraer.
Embraer’s EVE urban air mobility vehicle. Credit: EVE.
During a media briefing last month, Johann Bordais, EVE’s CEO, said the Urban Air Mobility (UAM) concept for EVE is a spin-off from an idea Embraer had in 2017. EVE was later spun off, while Embraer retains a majority stake.
“We became independent because we understand that we need to be agile, and go faster because the air mobility revolution was happening already,” Bordais said. “We needed to get moving. We also needed to get some funds and that’s why we also had a SPAC and we merged with Zanite.” SPAC stands for Special Purpose Acquisition Company.
EVE went public on May 10, 2022. With added funding, EVE began production earlier this year of the prototype.
Bordais said Embraer’s 54 years of legacy sets EVE apart from other concepts.
“It’s about knowing what we’re talking about. It’s not about just having prototypes flying around the cities. It’s about the whole ecosystem,” he said. “It’s about also the know-how.”
Embraer’s C-390 builds momentum; civilian freighter pondered
Subscription Required
By Scott Hamilton
Dec. 11, 2023, © Leeham News: Embraer’s flagship defense program, the KC/C-390 finally took off this year. Orders began rolling in, after a long drought and cancellations by the Brazilian government that cast doubt over the viability of the program. This month, an order for an undisclosed number of C-390s were announced with South Korea. Embraer is in contention for an order for around 80 transports from India.
Brazil, Portugal, Hungary, the Netherlands, Austria, and the Czech Republic have ordered the C-390. Some are in NATO configuration.
Embraer C-390 Millennium. Credit: Embraer.
The C-390 Millenium also comes in a tanker version, the KC-390, The twin-jet is about the size of a Boeing 737 dimensionally and a fuselage cross-width about the diameter of a Boeing 767. It is the Brazilian company’s largest aircraft. Its closest competitor is the Lockheed Martin C-130J.
The C-390 and the single-engine propeller trainer, the Super Tucano, are the defense unit’s to leading programs. In a media briefing last month, Bosco da Costa Jr, President, and CEO of Embraer Defense & Security, said the company developed more than 20 models of various types since Embraer was formed 54 years ago.
In 2017, Embraer and Boeing proposed a joint venture by which Embraer Commercial Aircraft (ECA) would divest from the Group into Boeing Brasil. Boeing would own 80% of the JV and Embraer would own 20%. A JV for the KC-390, with a 51%-49% in favor of Embraer would provide EMB with Boeing’s marketing heft to market the then-stalled sales of the tanker-transport. Both JVs were terminated by Boeing in April 2020 before the combination could be consummated. Since then, Embraer agreed with US defense contractor L3 Harris to help market the airplane.
Pontifications: Embraer sees easing in pilot shortage, wave of sales coming
By Scott Hamilton
By Scott Hamilton
Dec. 5, 2023, © Leeham News: Embraer officials see the pilot shortage easing in 2025 or 2026.
Francisco Gomes Netos, CEO of the Embraer group, said during a media briefing last month that the “situation” is getting better. Boeing, in its latest 20-year forecast, reported that 649,000 pilots will be needed globally over the next 20 years.
With a wave of pilot retirements, especially in the US, coming in the next few years, the shortage and demand seem daunting.
“In our internal market intelligence, I would say that the situation should be much better in 2025 and 2026. We see the situation improving,” Gomes said.
The biggest impact of the pilot shortage was on the 50-seat regional jet, CFO Antonios Carlos Garcia said. The majors want 76-seat aircraft.
Orders for Embraer’s E-Jet E2 have been slow. Because the E175-E2 exceeds the weight limit in the labor contracts, known as Scope Clauses, this model isn’t sold in the US, the biggest market for the 76-seat aircraft, and for Embraer.
The E190-E2 is an “in-between” aircraft that isn’t selected by many customers. The largest of the family, the E195-E2, has a backlog of a few hundred aircraft. But Embraer hasn’t been winning orders of the magnitude Airbus and Boeing are winning.
Gomes believes the E2’s day is coming. “It’s coming, the wave to focus on our segment.”
Harvest season at Embraer
Subscription Required
By Scott Hamilton
Francisco Gomes Neto, CEO of Embraer.
Dec. 4, 2023, © Leeham News: Embraer had a tough time beginning in 2017. A joint venture with Boeing was proposed following the Airbus acquisition of the Bombardier C Series program. The latter sent flares overhead with the expectation that Embraer could not compete against the rival C Series now that Airbus’ marketing would be in control.
A proposed turboprop program was struggling to close the business case. There were no advanced engines to power the model. The market was forecast to be a mere 2,100 airplanes over 20 years. The only remaining turboprop manufacturer outside China and Russia was ATR, which is 50% owned by Airbus. Airbus could crush any new entry from Embraer, should it choose. The E175-E2 was too heavy to comply with the US union contract Scope Clause, effectively killing this model. Without the E175-E2, the world’s biggest market for the E2 was closed to Embraer.
The JV held big promise for Embraer. The E-Jet E2 program engineering was largely done and the engineers needed work. Under the terms of the proposed JV, Embraer would participate in the development of Boeing’s proposed New Midmarket Airplane (NMA). Engineering and production were elements of the work package.
Additionally, Embraer would be responsible for developing a new 100-150 seat airplane for Boeing.
But the March 2019 grounding of the Boeing 737 MAX killed the NMA in January 2020, when David Calhoun became CEO. The COVID-19 pandemic cratered demand for all airplane types (including Embraer’s). In April 2020, Calhoun withdrew from the JV. Boeing claimed Embraer failed to meet all terms and conditions. Embraer denied this and the matter is in arbitration now. A decision is expected in the first half of 2024.
Today, Embraer is roaring back.
Embraer’s 3rd Quarter 2023 results contain good news
By Bjorn Fehrm
November 6, 2023, ©. Leeham News: Embraer presented its 3Q2023 results today. Commercial aircraft deliveries increased by 50% to 15 E-Jets compared with 10 jets in 3Q2022, and Executive jets delivered 28 jets versus 23 for 3Q2022.
Revenue for the group increased by 38% to $1,284m ($929m) for the quarter. The Services side increased revenue by 24% to $366m ($295m). The Defense revenue was up 40% to $133m($95m).
EBIT was $84m versus $11m for the same quarter last year. The company retained the 2023 guidance to deliver 65-70 E-jets and 120-130 Executive jets for the year.
Embraer 2nd Quarter 2023 results show a positive trend
By Bjorn Fehrm
August 14, 2023, ©. Leeham News: Embraer presented its 2Q2023 results today. Commercial aircraft deliveries increased to 24 E-jets jets for 1H2023 compared with 17 E-jets in 1H2022, and Executive jets delivered 38 jets (29) in the period.
Revenue for the group increased by 24% to $2,009m ($1,620m) for the half year. The Services side increased revenue by 12.7% to $666m ($591m). The Defense revenue was 7.7% down at $180m($195m).
Half-year EBIT was $21m (-$263). The company retained the 2023 guidance, which means delivering 65-70 E-jets and 120-130 Executive jets during 2023.
Paris Day Two: Air India finalizes earlier deals; Embraer, ATR announce orders
By Bryan Corliss
June 20, 2023, © Leeham News – While Monday’s news from the Paris Air Show was dominated by the one big Airbus order from Indian carrier IndiGo, Tuesday saw a host of smaller deals announced by OEMs, airlines and leasing companies.
IndiGo rival Air India also announced it had finalized its massive 470-jet order from February, which it had split between Boeing and Airbus.
While there was a significant volume of deals announced Tuesday, in many cases, they were formal announcements of deals that OEMs already were carrying on their order books.
- Air India finalizes Boeing, Airbus orders
- Boeing lands orders from airlines, lessors
- Airbus reveals new orders and buyers in previous deals
- Embraer and ATR announce first deals of show
- Eviation announces LOI for Alices
Are the world’s regional airlines dying?
Subscription Required
By Scott Hamilton
June 17, 2023, © Leeham News: Is the regional airline market across the globe dying?
Ed Bastian, CEO of Delta Air Lines. Credit: CNBC.
Many think so. Certainly, the market demand for the regional jet is shrinking in the 10- and 20-year market forecasts. Bombardier withdrew from the market as demand for its aging CRJ family shriveled. Mitsubishi Heavy Industries killed its RJ SpaceJet program as delays and development costs mounted. Bombardier also exited its turboprop airliner business. ATR is now the sole producer of large turboprops outside China and Russia.
Embraer is now the sole producer of regional jets outside of China and Russia, and it doesn’t even want to call the E-Jet a regional airliner.
Regional airlines in the US face a continuing and growing shortage of pilots. Those in Europe face pressure from environmentalists to the governments to ban short-haul flights in favor of trains.
Despite these challenges and the conclusions of some that the regional airline business is dying, regional carriers take exception to these conclusions.
One regional airline official even took exception to the CEO of Delta Air Lines, who concurred with the dead-and-dying trend.
Speaking at the Aviation Week MRO Americas conference in April in Atlanta, Ed Bastian noted that Delta began trending away from regional carriers many years before.