Embraer waits for Boeing’s move before defining new aircraft strategy

Embraer waits for Boeing’s move before defining new aircraft strategy

Embraer anticipates making a decision on designing a clean-sheet aircraft for the 130-seat segment once Boeing finalises its plans for replacing current single-aisle models.

Boeing in its talks with influential customers has offered them a variety of technologies, and aims to unveil its plans for either a re-engine or new design around the Paris air show in June.

Embraer CEO Frederico Curado during an earnings call today stated in his “humble opinion” a new design by Boeing makes a “lot of sense”.

Boeing’s ultimate decision will directly influence Embraer’s strategy in the 130-seat market, says Curado. “We are waiting to understand where Boeing is going”, before taking a decision to engage in the development of a five-abreast aircraft, he explains.

But he stresses Embraer does expect to make decision by year-end, explaining now that Airbus has opted to move forward with the re-engined A320neo, Boeing’s decision is the “final piece of this puzzle”.

Asked to provide his market place assessment in light of the A320neo Curado states: “For me it is really a continuation of the A320 heritage. It is a very successful programme.”

He does believe some of the customers Airbus has captured for the A320neo could have been targets for the Bombardier CSeries. “I think the [A320]neo does not help the CSeries case,” Curado says.

He feels no pressure for Embraer to re-engine or revamp its E-Jet family spanning 70 to 120 seats. Noting the E-Jets are still state of the art aircraft Curado believes a re-design would be premature. “Sales are a testimony of what I’m saying,” he states, adding Embraer has gotten off to a good start in 2011 with Alitalia‘s decision to add 20 E-Jets – 15 E-175s and 5 E-190s-to its fleet

If Embraer decides to design a new aircraft Curado believes the airframer has the technology and industrial capacity to support the programme. However, he states it is too early discuss how Embraer would finance new aircraft development. One source is cash flow generation, but Curado admits that’s not sufficient enough to entirely support designing a new model. While Embraer has “a lot of room for indebtedness”, Curado stresses it is “too early to define how we’re going to finance that [a new programme]”.

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