Despite CEO Frederico Curado’s recent expression of reticence over the possibility of re-engining of Embraer’s E-Jet line of airliners, the Brazilian company apparently has decided to spend $2 billion on a project to do just that by 2018. Last week Embraer commercial aircraft president Paulo Cesar Souza e Silva confirmed the plans, including the possibility of stretching the E195 by some 10 seats, reducing to virtually nil the chances for development of a new narrowbody this decade.  

During a November 3 briefing on the company’s third-quarter financial results, Curado effecively confirmed the company’s loss of interest in introducing a new airliner into the seat-capacity segment extending into the range of the Boeing 737 MAX and Airbus A320neo. 

“We are concluding our studies,” said Curado. “We believe it will be difficult for us to penetrate this segment, not because of technical or industrial aspects and not because [we lack the] ability or capacity to build a family of planes that would be competitive and even slightly better than the market alternatives. It has more to do with the competitive scenarios.”

Curado identified the re-engined Airbus A320 and Boeing 737 families as his main concerns. “The competitive advantage we would be able to bring with our own plane would not be enough,” he said. “Our plane would be a bit more efficient, [but] we are finding it difficult to achieve the return on investment we would need.”

At the time, Curado ruled out re-engining the existing E-Jets in the near future. “The [Embraer] 170 and 190 are very young planes. They were recently certified and they have a long life ahead,” he stressed. “At some point in the future these airplanes will have a new generation with new engines and other improvements, but we don’t believe this will happen in the short term.”  

Three Factors Drive Growth

Embraer believes three factors will drive huge growth in the Middle East regional jet fleet over coming years: regulation, lack of connectivity and the need to “right-size” aircraft to match demand. “We aim to double our orders in Africa and the Middle East over the next two years,” said Mathieu Duquesnoy, the Brazilian manufacturer’s vice president commercial aviation for the Middle East and Africa, who added that “long-term growth is a fact.

“Our strategy in this region is clear,” he said. “We have the right aircraft to serve this market. Most routes don’t have the capacity for twin-aisle aircraft. Second, we have a dedicated team for this market, and third, we have a well established customer support presence.”

Duquesnoy’s comments came during a briefing hosted by Oman Air in Oman ahead of the Dubai Air Show. The airline has started to take delivery of E-175s after ordering five aircraft plus five options, with the first aircraft having been delivered in March. “These are the ideal platform with which we can expand our regional route network and better align frequency with demand,” said Oman Air CEO Peter Hill. “Having this flexibility allows us to introduce more point-to-point routes not sustainable with larger aircraft.”

Embraer figures show that 84 percent of the fleet in the Middle East comprises aircraft with more than 120 seats, and yet 55 percent of intra-Middle East markets are underserved, with 135 routes not offering daily return flights.

The region’s airlines, with nine operators in six countries, currently have on order a total of 65 aircraft, with Embraer claiming a 74-percent market share in the 30- to 120-seat capacity in the region. The OEM’s E-Jet family comprises the 170, 175, 190 and 195 models, covering the 70- to 122-seat range.

E-Jets have seen some 950 firm orders and 700 deliveries since 2004, including nearly 50 in the Middle East. Overall, the Brazilian manufacturer sees a global market by 2030 for more than 7,200 aircraft in the 30- to 120-seat category worth $320 billion, 2,115 of which it believes will be jet-powered aircraft for the Middle East market.