AEROSPACE & DEFENSE INDUSTRIES
Embraer sets sights on China and India with latest jets
Brazilian aircraft maker focuses on Asia-Pacific, seeking 100 deliveries in 2025
Embraer's E195-E2 aircraft is undergoing the certification process in China. © Reuters
HIDETAKE MIYAMOTO, ARATA SHIGENO and YUSUKE HINATA, Nikkei staff writersApril 5, 2023 10:39 JST
SAO PAULO/TOKYO/GUANGZHOU -- Embraer, the world's third-largest aircraft supplier, plans to expand its footprint in the narrow-body passenger jet market in Asia, where demand is expected to take off.
By 2025, the Brazilian manufacturer aims to deliver 100 jets a year with up to roughly 150 seats. Asian markets, such as China and India, will be front and center of that strategy, CEO Francisco Gomes Neto said in an interview in Sao Paulo.
Embraer is a leader in commercial planes with fewer than 150 seats. Delivering 100 aircraft worldwide in a year would mark a 75% increase from last year's total.
The company has laid groundwork to deliver planes to China. In November, one of the latest in Embraer's E2 series, the E190-E2 commercial jet, won type certification -- approval of an aircraft's design for airworthiness and other standards -- from Chinese authorities. The E195-E2 is expected to receive type certification soon.
Embraer jets will compete in China with the ARJ21, made by the state-owned Commercial Aircraft Corporation of China (COMAC). But Gomes Neto contends that the E2 family is superior, noting that it is "very efficient, very quiet and very comfortable."
New orders from China could be announced this month when Brazilian President Luiz Inacio Lula da Silva is due to visit China from April 12.
Meanwhile, the company is in talks with India airlines over passenger jets, and a contract could be signed "in 2024," said Gomes Neto. Embraer has yet to make any deliveries to India.
Embraer is in talks with India airlines over passenger jets, according to CEO Francisco Gomes Neto. (Photo by Hidetake Miyamoto)
India and Embraer are also negotiating deliveries of warplanes. Embraer is considering opening a production site in India with a local counterpart if orders are secured.
The global market for 61- to 170-seat jets stands at 15,425 units between the years 2022 and 2041, according to industry researcher Japan Aircraft Development Corp. (JADC), with a value of $1.38 trillion.
The pandemic severely dented demand in 2020, but orders picked up again in 2021.
Embraer delivered 41 aircraft, including cargo planes, that year, according to JADC data, taking a commanding lead over Canadian rival Bombardier, which delivered three planes.
In China, Boeing and Airbus command strong shares in all aircraft, according to British market intelligence company Cirium. COMAC has taken a 2.2% slice, edging out Embraer's 2% share.
Embraer estimates global demand for 150-seat and smaller passenger planes will amount to around 8,500 units. The Asia-Pacific region, including China and India, will account for 2,200 units.
In North America, Embraer's main market, "we see a kind of stagnation" through 2025 due to a pilot shortage, said Gomes Neto. But in Asia-Pacific, "we see a lot of movements or sales -- very good opportunities for Embraer," he added.
Embraer's presence in Asia has been limited. Out of nearly 570 E-190 aircraft delivered, only 20% went to Asia-Pacific. The ratio sinks to 10% for the newer E2 series.
The Chinese government is pushing hard to develop the domestic passenger plane industry. Chinese airlines, which would be prospective buyers, are dealing with financial difficulties after weathering the country's zero-COVID policies.
The apparent trend to hold back investment in new planes is causing headwinds. Meanwhile, orders for aircraft are often used as diplomatic bargaining chips. For Embraer, Chinese companies will become powerful rivals.
The E2 series, which is between 97 and 146 seats, is staking a position between the COMAC ARJ21 (78-90 seats) and the soon-to-be-launched C919 (158-192 seats). Embraer will target airlines that are looking to decrease empty seats for regional connections while maximizing earnings on those routes.
China Southern Airlines, the country's biggest airline, has added Embraer aircraft to its fleet in the past.
In Japan, where Mitsubishi Heavy Industries
recently decided to pull out of the regional jet business, domestic airlines are considering alternative models.
Brazilian aircraft maker focuses on Asia-Pacific, seeking 100 deliveries in 2025
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