Embraer broadens its bizjet ambitions
Embraer wants to change the face of the business aviation market to the same degree that it has already revolutionized the regional airliner sector. Just before the 2005 EBACE show, the Brazilian airframer announced two new corporate aircraft–the Phenom 100 very light jet (VLJ) and the Phenom 300 light jet. And yesterday, here in Geneva, it further surprised its rivals with the launch of the new Lineage 1000 jet (see page one), which will add a large-cabin jet to its portfolio, complementing the super-midsize Legacy 600 model.
While Embraer is a relative latecomer to the emerging VLJ sector, the company is convinced that it can still be a market leader. “We may not be the first, but we are confident that our aircraft will be the best in the class in terms of comfort, performance and operations,” said Luis Carlos Affonso, Embraer vice president in charge of executive aviation. Embraer sees 20 percent of its revenues coming from business aviation by 2015, up from 7 percent in 2005. It wants to grab fully 30 percent of the VLJ market.
Demand for the Phenom family has been stronger than expected in Europe. According to company projections, 24 percent of new business jet deliveries in Europe will be VLJs. “We expected the U.S. to be the main driver in the VLJ market but we are seeing strong interest in Europe,” Affonso said.
Demand in Europe has been coming mainly from branded charters and air-taxi services. “We don’t expect a lot of owner-operators in Europe,” Affonso added.
Phenom 100 Design Defined
Embraer has already locked up the design for the Phenom 100 and the company expects the first metal cut by mid-year and sub-assembly to begin by the end of the year. In just over a year, the aircraft is expected to make its first flight and deliveries are expected to begin in mid-2008.
While the Phenom 100 is the most expensive VLJ on the market, the company is convinced that the comfort of the aircraft will be a significant selling point. Affonso said many clients that are looking to acquire light jets could be attracted o the Phenom 100. Affonso added that the cost to operate–roughly $440 per hour– makes the aircraft a replacement option for turboprop owners and for people looking to light jets.
The Phenom 100 seats four passengers and has 45 cu ft of baggage space in the main baggage compartment, five cu ft in its nose, as well as five cu ft inside the aircraft. The interior of the aircraft was designed by BMW, the car manufacturer’s first venture into the aircraft industry.
The Phenom 100 will be powered by Pratt & Whitney Canada’s PW617F engine, with 1,615 pounds of thrust. Its range will be 1,160 nm with IFR reserves or 1,320 nm VFR with four passengers. The aircraft will have a maximum operating speed of Mach 0.7 and can fly at 41,000 feet.
Embraer has contracted Garmin for the avionics, B/E Aerospace for oxygen, Zodiac for the fuel system and Eaton Aerospace for its hydraulics, flap actuators, thrust control, landing gear controls and hydraulic components.
The cross-section of the aircraft is also higher and wider than other VLJ cabins, according to Embraer. It offers 4 feet 11 inches of headroom, compared with 4 feet 2 inches in the Eclipse 500, 4 feet 4 inches in the Adam Aircraft 700, and 4 feet 8 inches in the Cessna Citation Mustang.
Embraer will be offering the jet for $2.75 million through the end of May, after which the price will increase to $2.85 million. “We wanted to give Europeans a chance to see the mock-ups before ending the official launch period,” said Affonso.
The company’s first delivery position for new Phenom 100 is in mid-2010. Embraer does not plan to disclose its Phenom 100 order backlog until later this year.
Engineers Flock to Phenom 300
The Phenom 300 recently entered the joint definition stage. Embraer recently hired 300 new engineers to work on the Phenom 300–selecting them from a pool of staff who had developed the Embraer 170/190 family of airliners. Unlike the 100, the 300 will have a brake-by-wire system being developed by Dunlop, which the company believes will dramatically reduce problems with landing. The Phenom 300 is powered by a pair of 3,200-pound-thrust Pratt & Whitney Canada PW535E turbofans that give a maximum operating speed of Mach 0.78. The aircraft can seat up to nine people, and will have a range of 1,800 nm IFR (with six passengers). Service ceiling is 45,000 feet.
The Phenom 300 is expected to be priced at $6.65 million. Service entry is planned for mid-2009.
Embraer plans to offer a series of options that will reduce maintenance times and cost. The goal is to have all of the Phenom 300s connected to maintenance centers via a wireless datalink. The datalink will not only make it easier for Embraer to provide services to the new aircraft, but it will also give pilots and owners feedback regarding their operations. Initially, this service will be offered without the wireless datalink. Embraer has not yet defined when the service will be available.
Embraer will be doing the final assembly of the Phenom family at its facilities in Gavião Peixoto. According to Affonso, Embraer had originally projected construction of 100 aircraft per year, but because of strong demand, the company is analyzing how to increase its production capacity after 2009. To date, Embraer has basically used the Gavião Peixoto facility to test its aircraft, but the site has nearly 600,000 sq ft of unused space for expansion.
Support Network Will Grow
Part of the capital will also be used to expand the service network. “Embraer is new to this industry and we need to expand our service network quickly,” said Mauricio Aveiro, Embraer’s vice president in charge of business aviation customer support.
In Europe, Embraer currently has five maintenance centers located in Lisbon, Paris, Dusseldorf, London and Zurich. In coming years, Embraer plans to expand its network into South Africa, the Middle East, Eastern Europe, as well as build a second location in Central Europe. Aveiro said that the company will unveil its new service network by the end of the year, including which centers will be authorized and which will be Embraer operated.
The company is expanding its Total Legacy Care (TLC) program to include the Phenom aircraft and will be rebranding the service package Total Embraer Care (TEC). The basic premise of the TEC program is that customers are increasingly demanding that business aviation manufacturers offer a one-stop shop to resolve all of their maintenance issues. Likewise, for a fee, the company will offer its clients parts and maintenance for a period of 10 years. The program will provide everything from technical support, parts and both scheduled and unscheduled maintenance.
Later in 2006, Embraer also plans to announce the identity of its pilot training partner. It has already announced that it will have a full flight simulator in both Europe and the U.S. before the service entry of the new jets. There will also be one flight training device in the U.S. and cockpit procedure simulator in both Europe and the U.S.
Affonso stressed that Embraer is taking training very seriously, given that the VLJ market is likely to attract more owner-operators. However, the company believes that the majority of owner-operators will opt to fly the aircraft with a mentor pilot. Likewise, Embraer expects nearly all of its Phenom 300s to be professionally operated.
Analysts are giving Embraer’s new strategy positive reviews. In a recent report, U.S. investment bank Merrill Lynch expressed its optimism regarding Embraer’s expansion into the business aviation market. Because most of the aerostructures for the Phenom 100 and 300 will be built in Brazil, Merrill Lynch is confident that Embraer will be able to offer a competitive price for the new class of aircraft. “Labor rates in São Jose dos Campos are simply more competitive than rates in Wichita, Kansas,” the report said. “The market’s appetite for this aircraft and favorable margins [are] an affirmation that Embraer will be a viable competitor in the biz jet category,” the report concluded.