In the accumulated result for the year up to September, the company has already delivered 153 aircraft. The firm order backlog totaled US$ 18.6 billion in late September, lower than at the end of the previous quarter.
Of the total number of aircraft delivered by Embraer in the last quarter, 29 were for the commercial aviation sector, 27 for the executive aviation sector and one for the defense sector.
Among the companies that received Embraer jets in the period are British Airways, from the United Kingdom, LAM Mozambique, Lufthansa Cityline, from Germany, and Lot Polish Airlines.
In the defense area, Embraer made a delivery to the government of Brazil. The Embraer 190 should be used on missions of the Presidency of the Republic, according to the company, and is being operated by the Brazilian Air Force (FAB) Special Transport Group.
Embraer is the global leader in production of commercial jets for up to 120 passengers. The company is headquartered in São José dos Campos, in the interior of the state of São Paulo, and has offices, industrial installations and workshops in Brazil, the United States, France, Portugal, China and Singapore. Embraer employs around 17,000 people.
]]>The company's president, Frederico Fleury Curado, said during a luncheon with journalists, on December 18, that he is expecting strong recession in the company's main markets, i.e., the United States and Europe. "And the growth of emerging countries, high as it may be, will not suffice to suppress recession in developed ones," he stated.
In addition to the perspective of poor performance of the global economy, which should lead to a reduction in demand, Embraer is faced with the same problem as other productive sectors: lack of credit. Without financing, no one buys airplanes.
Embraer estimates that it should post revenues of around US$ 6.3 billion in 2009, a figure lower than the US$ 6.5 billion posted this year, despite the forecasted delivery of approximately 270 commercial aircraft, as against little over 200 units in 2008.
This is so because 110 jets scheduled to leave the factory next year will be of the Phenom model, smaller and cheaper than the ones sold up until now.
The executive believes that next year, its 40th anniversary year, the company is going to deliver previously ordered aircraft, more than sign new contracts. "It is going to be a challenging year, but we will stick to our principles," he asserted.
Curado also said that a good firm order backlog – the company currently has US$ 21 billion in backlog – is no guarantee of good performance in terms of revenues. This is so because even contracts that have already been signed may be canceled if the client is unable to obtain loans from banks. "A strong backlog may not be enough to ensure strong revenues," he said.
In the commercial aviation area, he says that there should be a reduction in deliveries in 2009, and an expansion in the executive area as deliveries begin for the Phenom and the Lineage 1000, a large-sized executive jet. "We are going to monitor things as we go along, we do not know how long this external situation is going to last," the executive declared.
He stated, however, that the company did not make any decision with regard to cuts, especially job cuts. "We have not made any decision, however, there is a concern that 2009 might be a difficult year, in which case we will be forced to react," he said.
Curado ensured, though, that the company's investment program is secured. "We are not going to compromise our future on the strength of short-term problems," he said. "Our priority is survival in the long run," he claimed.
The company itself is not going to grant financing to clients, for instance. According to the executive, the rule of thumb is always to keep the volume of cash above that of debt.
Performance in 2008, however, is cause for celebration. According to Curado, the sales volume was good during the first half and then decreased in the second. The company delivered more aircraft than forecasted, and signed US$ 7 billion worth of new contracts during the year.
He mentioned a few highlights, such as the sale of airplanes to Brazilian airlines Trip Linhas Aéreas and Azul, which recently had its Embraer 195 delivered.
Embraer used to be faced with the contradiction of being widely respected abroad, but not having any of its newer models operated by Brazilian companies. This problem has now ceased to exist.
Curado also mentioned the certification of the Phenom 100 and the Lineage 1000 by airspace authorities and the launch of new executive models Legacy 450 and Legacy 500.
The appreciation of the dollar against the Brazilian currency (the real) benefited the company as well, having contributed to increase its revenues in the domestic currency.
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]]>According to Embraer world air travel demand should grow on an average of 5% per year, from 2009 to 2028. Embraer estimates that the air transportation industry will react positively, after the end of the current economic crisis, and that the long-term growth trend will be maintained.
China should lead the growth in the next 20 years, with an average annual rate of more than 7.5%, followed by the emerging regions of Latin America and Russia & Commonwealth of Independent States (CIS), both at 6% per year. Asia Pacific and Africa will grow about 5%, and the European and North American markets, 4%.
Embraer foresees a global demand of 6,750 jets with a 30- to 120-seat capacity over the next 20 years, which will generate sales of new aircraft totaling US$ 220 billion. Of this total, 2,950 jets should be delivered between 2009 and 2018, and the remaining 3,800 units between 2019 and 2028.
The forecast indicates that the 30- to 60-seat capacity segment will be under pressure, over the next five years, due to the economic crisis and fuel prices, forcing airlines to review their strategies, mainly in the North American environment. The 50-seat regional jet market has achieved maturity, but tends to continue supporting the U.S. and European systems and to contribute to the development of regional aviation in Russia & CIS, Mexico, Africa and South America.
The jets with 61 to 120 seats should continue to help airlines match aircraft capacity to market demand, by right-sizing low load factor narrow-body airplanes that have too many seats. Furthermore, the jets in this segment also tend to be used to substitute older fleets, to expand into new markets, and to aid the natural growth of regional airlines on high demand routes operated by smaller jets, for the purpose of increasing revenues and market share.
Embraer believes that emissions will be one of the main influences on the development of future aircraft. Today, more than 700 units of the 30- to 120-seat fleet are over 20 years old and should soon be replaced, which will result in significant environmental benefits. In this scenario, Embraer's family of E-Jets provides a reduction of as much as 50% in carbon dioxide emissions.
Embraer forecasts a global demand of 11,880 business jets for 2009-2018, which could generate approximately US$ 204 billion in new aircraft deliveries. The new air taxi and branded charter market may add yet another 1,800 to 2,800 jets to the personal and entry level segments for the same period.
Since 2006, the industry has posted consecutive delivery records, largely supported by the growing demand from non-U.S. markets, but deliveries are expected to slow down, in 2009, with a market adjustment in the 2009-2012 period. Despite the reduction in short-term deliveries, long-term sustainable growth is foreseen for the business jet market, due to the return of economic growth, albeit at more conservative levels.
Launched in 2005, the Phenom 100 and Phenom 300 jets are positioned in the entry level and light segments, respectively. The Phenom 100's maiden flight occurred on July 26, 2007, and the model has already accumulated over 1,300 hours of test flights for certification, which is expected by the end of the 2008.
Ten Phenom 100s are expected to be delivered to North American customers this year. The first flight of the Phenom 300 occurred on April 29, 2008. The flight test campaign for certification moves steadily ahead, and is expected to be concluded in the second half of 2009.
In May 2006, the Company launched the Lineage 1000, an ultra-large executive jet based on the platform of the EMBRAER 190 commercial jet. The first airplane took its maiden flight on October 26, 2007. Today, four jets are in the final interior assembly stage. Certification and the first delivery of this model will occur by the end of 2008.
The Legacy 500 midsize and Legacy 450 midlight business jets were launched in May of this year, and should enter service in the second half of 2012 and 2013, respectively. The Legacy 600 continues to increase it market share, currently 15% in the super midsize category, and now has over 150 aircraft operating in 23 countries.
Embraer is investing over US$ 100 million in the infrastructure and organization for customer support and services. In 2008, three new Company-owned service centers were inaugurated in the States of Connecticut, Arizona and Florida, in the United States.
The service network will be comprised of 45 centers, including seven wholly owned facilities. Embraer CAE Training Services (ECTS), a joint venture between Embraer and CAE for training Phenom jet operators, has already completed the instructional program for the first mechanics and customer pilots.
The ECTS training center in Europe, located in the United Kingdom, will begin operations in the first half of 2009. Embraer has also invested in replacement parts inventory and logistics, as well as in expanding its maintenance programs for executive jets. Embraer Executive Care (EEC), a comprehensive by-the-hour maintenance program, is now available to Phenom jet customers.
The acceptance of the Phenom, Legacy and Lineage executive jets, and the continuous progress of their respective development programs has resulted in a current firm order backlog of US$ 7 billion, which is a significant increase over previous years (US$ 4 billion, at the end of 2007, US$ 2 billion, in 2006, and US$ 600 million, in 2005). Firm orders for the Phenom 100 and Phenom 300 stand at over 800 units.
Forecast for 2009
Embraer has revised its estimated aircraft deliveries for 2009, and expects to deliver 270 jets for the commercial aviation, executive aviation and defense and government (state-owned airlines and transportation of government officials) segments. The Company has also released its investments forecast for 2009, totaling US$ 450 million.
Embraer is the world's largest manufacturer of commercial jets up to 120 seats, and one of Brazil's leading exporters. Embraer's headquarters are located in São Jose dos Campos, São Paulo, and it has offices, industrial operations and customer service facilities in Brazil, the United States, France, Portugal, China and Singapore.
Founded in 1969, the Company designs, develops, manufactures and sells aircraft for the Commercial Aviation, Executive Aviation, and Defense and Government segments. The Company also provides after sales support and services to customers worldwide. On September 30, 2008, Embraer had a workforce of 23,745 employees and a firm order backlog of US$ 21.6 billion.
]]>The total value of the firm orders, at list price, is US$ 167.5 million, and could go over US$ 1 billion if all of the options and purchase rights are confirmed for the Embraer 175.
"We are proud to have Trip Linhas Aéreas as the newest operator of our E-Jets family in Brazil," said Frederico Fleury Curado, Embraer President and CEO.
"Trip is one of the largest regional airlines in South America, and we are certain that the Embraer 175 will contribute to both enhance its growth process and consolidate Brazil's regional air transportation network."
Trip's Embraer 175 jets will be configured in a single class, offering seats to 86 passengers. The delivery of the first airplane is expected for 2009.
"The Embraer 175 was chosen by Trip after a thorough technical-economic evaluation," said José Mário Caprioli, founder and President of Trip Linhas Aéreas. "The model presented advantages in the three basic aspects of our analysis: best relationship between operating cost and passenger comfort, performance on short runways, and seating capacity.
"This last factor was decisive for us, since we are a regional airline and, for that reason, we need a fleet of aircraft with fewer seats in order to serve our markets and maintain our operations. We are proud of the fact that the jet is made in Brazil and that we can collaborate in integrating the Brazilian commercial aviation system."
The Embraer 175 is the second of the four members of Embraer's E-Jets family and entered service in July 2005. On March 31, 2008, there were 835 firm orders for the Embraer 170/190 E-Jets plus 840 options from more than 45 customers in 28 countries, and the model had surpassed 1.4 million flight hours.
Service
]]>"It would be interesting to establish a partnership, so that we could bring Arab professionals here to learn all of this Brazilian technology," stated the Tunisian ambassador in Brasília (capital of Brazil), Sefeddine Cherif.
At the Embraer plant, in the city of São José dos Campos, interior of the southeastern Brazilian state of São Paulo, the ambassadors got to know the assembly lines for executive and business jets, which are exported to 78 airlines in 45 countries, including the Arab market.
"The Arab world must get in touch with Embraer so as to acquire better knowledge of its aircraft. The company offers high quality airplanes at good prices," said the ambassador of the League of Arab States to Brasília, Bachar Yagui.
The United States, which answer to approximately 60% of the company's revenues is Embraer's largest client. In recent years, the airplane maker has been betting on the Arab market, where demand for business jets is strong.
The first unit of the company's most luxurious jet, the Lineage 1000, which costs approximately US$ 40 million, will soon be delivered to the United Arab Emirates. In the business aircraft field, Embraer has exported to Egypt, Jordan, Saudi Arabia and Libya, and in the executive aircraft field, to the Emirates, Kuwait, Lebanon, Saudi Arabia and Libya.
According to Cherif, Tunisia has potential to be a large importer of Embraer's jets. Besides, the country could export parts to the Brazilian company, which usually purchases large quantities of items for aircraft assembly. The company, which has offices and service units in China, the United States, Portugal, France and Singapore, is also interested in opening an office in Dubai to better cater to its expanding market.
In 2006, Embraer delivered 131 jets. Last year, the figure increased to 169, and the forecast for this year is around 200. This rise in aircraft demand led the company to hire 4,000 new employees last year. The firm order backlog of Embraer reached US$ 20.3 billion in the first quarter.
Also in São José dos Campos, the ambassadors visited aerospace engineering company Avibras, and were also surprised by the know-how displayed by the company, whose main client is the Arab market.
Avibras, a maker of systems and materials in the areas of defense, communication and electronics, transport, aerospace, and chemicals, was a pioneer in the Brazilian aerospace sector. With a strong influence in the Middle East, the company has had an office in Saudi Arabia, its leading client, for approximately 20 years.
"We have long-standing relations with the Arab countries, dating back to 1980, and our clients have already become our friends," said the president at the company, Sami Youssef Hassuani, a descendant of Syrians and Lebanese. According to him, Arab importers of Avibras' products include the United Arab Emirates, Qatar, Oman, Algeria, Egypt and Morocco.
Anba
]]>A press release issued by the Brazilian company explains that the growth happened as a result of the greater number of deliveries, of the mix of products delivered and of the reduction in the exchange rates.
The company's net profit reached 63.4 million reais (US$ 38.1 million), growth of 8.4%. During the same months in 2007, net profit was 58.5 million reais (US$ 35.2 million).
The company's firm order backlog closed the first quarter this year on a record high value of US$ 20.3 billion. The company explains that this is mostly due to orders for aircraft of the Embraer 170/190 family, for which there are 835 firm orders and 840 purchase options.
Embraer delivered 45 jets for business and executive aviation between January and March. The figure increased significantly in comparison with the same months of 2007, when 25 aircraft were delivered.
In 2008, the company intends to deliver from 195 to 200 aircraft, as well as 10 to 15 Phenom 100 jets, which should receive certification in the second half this year, according to company forecasts.
In the first quarter this year, Embraer was informed of firm orders to be placed by new customers, such as Air Moldova, from Moldavia, Jetscape, from the United States, and Azul Linhas Aéreas Brasileiras, a new Brazilian airline.
Companies that already operate with Embraer aircraft, Finnair, from Finland, and Lot Polish Airlines, from Poland, placed new orders as well. Options were also converted into firm orders by airlines Virgin Blue, from Australia, Egypt Air, from Egypt, and M1 Travel, from Switzerland.
The company's operational expenses totaled 301.3 million reais (US$ 181.3 million), growth of 3%. Commercial expenses rose 3.1%, closing at 165 million reais (US$ 99.3 million).
Management expenses saw a reduction of 2.1% and totaled 93 million reais (US$ 55.9 million). In March, the company should conclude the repurchase of 16,800,000 of its own shares, for an average price of 19.06 reais (US$ 11.47), representing disbursement of 302 million reais (US$ 181.7 million).
Embraer is a leading manufacturer of business jet aircraft with up to 120 seats, and one of the largest exporter companies in Brazil. It is headquartered in the city of São José dos Campos, in the interior of the state of São Paulo (Southeast Brazil), and owns offices and operations in the United States, France, Portugal, China and Singapore, as well as Brazil. By late March, the company had 23,878 employees.
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]]>"We believe that the market is expanding, because all indicators are positive, including economic growth perspectives, establishment of new industries, and growth in tourism. All of that points to a growth trend," said the market intelligence director for executive aviation at Embraer, Cláudio Camelier, who went to Dubai.
During the event, the company announced that it received orders for 63 new jet aircraft of various models and sizes, totaling US$ 665.5 million. "The fair is being great, both for executive and commercial aviation," said Camelier. Contracts were signed with airlines from Saudi Arabia, Abu Dhabi, Dubai, Nigeria, India and Spain.
According to the executive, sales had already been negotiated and were announced at the fair, but new negotiations got started during the event. "We have not yet disclosed the total value, but many business deals were initiated," he declared.
According to Camelier, economic development in the Arab world heightened the demand for aircraft to be used in regional flights, such as the executive and commercial models made by Embraer. According to him, there has also been a change in perception regarding the use of executive jet aircraft.
"They are no longer regarded as luxury items, but rather as a productivity tools," he said. "Air charter services, for example, have grown a lot in the region," he stated.
To the executive, Embraer's aircraft have features that appeal to Middle Eastern customers. The Legacy 600, for instance, is the only one in its category (super mid-size) that can have its cockpit divided into three different sections. In turn, the Lineage 1000 is a large-sized executive jet modelled after the Embraer 190, a commercial aircraft with capacity for more than 100 passengers.
According to Camelier, the Middle East is the region with the highest demand for the Lineage. The model's first unit should be delivered in the second half of 2008 to businessman Abdul Jalil Al Fahim, executive director at Abu Dhabi-based Alfahim Group, which operates in several fields, such as auto trade, industry, hotels and tourism. The aircraft has autonomy for direct flights, for example, from Dubai to London.
The company will continue to develop its activities in the region. According to Camelier, it already has an office and a sales director in Dubai.
"Our presence is a constant one," he said, stating that the Embraer will continue to showcase its aircraft and that next year the company will participate in the Middle East Business Aviation (Meba), in Dubai, a trade show turned exclusively to executive aviation.
Anba – www.anba.com.br
]]>TAM said it will cut demand for narrow-body Airbus jets by five planes a year during the period. The airline previously planned to have 103 narrow-body jets in 2008, 106 in 2009, 112 in 2010 and 115 in 2011. However no mention was made of international flights.
Brazil's civil aviation industry has been in crisis for the past year due to overcrowding, air traffic controller strikes and massive delays.
A TAM airliner crashed at São Paulo's Congonhas airport in July, killing 199 people. The crash at Brazil's busiest domestic airport has led the government to review use of the airport, potentially limiting expansion of the domestic aviation market.
TAM's main rival, GOL Linhas Aereas Inteligentes, has already warned of a reduced fleet plan this year.
TAM said plans for international flights remain unchanged. It currently flies to Paris, London and Milan in Europe and New York and Miami in the United States. It plans to start flights to Frankfurt from November 30 and it also intends to start daily flights to Madrid by December.
Despite the changes to the fleet plan, TAM said it is sticking to its forecast of a 10% to 15% rise in domestic demand in 2007, a market share above 50% and domestic occupation rates above 70%.
TAM has firm orders for 51 narrow-bodied Airbus jets, which include the A319, A320 and A321, and orders for 10 A330 planes through 2011.
In late August TAM announced it had ordered four additional Boeing 777-300ER planes worth US$ 1 billion. Boeing said TAM was the first Latin American airline to add the long-range jetliner to its fleet when it placed an order for four planes earlier this year.
TAM Linhas Aereas SA said the new planes will help the company save fuel and increase its presence in the international market. It is set to receive its first of the planes in June 2008.
Mercopress
]]>"This is a key milestone for Embraer and a very special and rewarding moment for the entire Embraer team. To see our new baby bird taking off is highly satisfying and I congratulate every Embraer employee for making this possible," remarked Frederico Fleury Curado, Embraer President and CEO.
"When we unveiled the Phenom jets a little more than two years ago, we asserted to the business aviation community our commitment to be a long-term player in the executive aviation market. The first flight of the Phenom 100 confirms this commitment and constitutes another step in Embraer's strategy to serve our customers with a product line that spans the market."
Upon deplaning from the Phenom 100, test pilots Capt. Antonio Bragança Silva and Capt. Eduardo Alves Menini, together flight test engineer Marcelo Toledo Basile said they were satisfied with the maiden flight.
"We had a successful first flight. All maneuvers and tests were performed as planned," said Capt. Bragança. "We were very impressed with the Phenom 100 performance and flying characteristics, as well as the exceptional comfort and ergonomics of its cockpit design."
PP-XPH was flown for 1 hour and 36 minutes, and several maneuvers were performed to check the aircraft's flight characteristics and systems operations. Members of all the engineering teams involved in the Phenom 100 program were on the ground, analyzing flight data and supporting the test crew on board the jet.
According to Embraer, the two Pratt & Whitney Canada PW617F engines, each with 1,615 pounds of thrust powering the Phenom 100, operated flawlessly during the entire flight.
The first flight was preceded by several weeks of ground tests. The results confirmed the Phenom 100's operations throughout ground vibration, flight control, low and high-speed taxiing, and systems functionality and integration tests.
A full test program, including static and fatigue tests, will follow the maiden flight in order to obtain Brazil's National Civil Aviation Agency (ANAC) certification, which will be followed by FAA certification, prior to entering service in mid-2008. EASA certification will be completed in the first half of 2009.
The Phenom 100 was launched in May 2005, as a best-in-class executive jet in the very light category. The first metal cut of the Phenom 100 took place in May 2006, using a digital mock-up of the aircraft developed with CATIA V5 engineering software.
Sub-assembly manufacturing of the Phenom 100 was carried out at the Company's Botucatu, Brazil facility. Upon completion, fuselage and wings were delivered to Embraer's main facilities in São José dos Campos.
Last June 16, the jet was rolled out of the hangar, marking the conclusion of final assembly. A few days after the rollout, on June 21, the Phenom 100 was presented in brand colors for the first time.
]]>According to Emirates News Agency (WAM), the Armed Forces of the Emirates are studying the possibility of purchasing training airplanes from three foreign companies, among them Brazilian aircraft maker Embraer. The Brazilian organization has a stand at the fair.
Before the end of the expo the Emirates' Armed Forces had already closed up orders worth US$ 670 million, with various foreign companies. They are still evaluating, according to WAM, the purchase of Swiss Pilatus turboprop aircraft, of Italian Aeromacchi airplanes or of Embraer turboprops for pilot training.
These three companies were short listed from 12 aircraft makers participating in the fair. Embraer is the only Brazilian company participating in Idex.
Embraer has various defense products, among them the Super Tucano. Early last year the company took the aircraft on a tour of countries in Africa, Asia and the Middle East, including some Arab countries. The Super Tucano is a last generation military turboprop for training and light attack.
Embraer has already received orders for 120 Super Tucanos by the armed forces of Brazil and Colombia. Fifty of the airplanes are already in operation. The first international order was placed by Colombia in December 2005 and the first aircraft were delivered at the end of last year.
To Idex, which is taking place at the International Exhibition Center, Embraer sent a group of representatives led by Ricardo Bester, the Customer Support Director in the Defense and Government Department.
"Like no other region in the world, the Middle East presents high concentration of strategic natural resources, as well as extensive maritime and land frontiers, placing self-defense among the main concerns of the countries in the region," stated Luiz Carlos Aguiar, vice-president for the Defense and Government Market at Embraer, in a press statement.
Apart from the Super Tucano, Embraer has other defense products for intelligence, vigilance and reconnaissance, among them the Embraer 145 Airborne Early Warning and Control (AEW&C). The aircraft is already in operation in Brazil, Greece and Mexico.
There is also aircraft 145 Remote Sensing/Air Ground Surveillance (RS/AGS), which supplies real-time and near real-time imagery and electronic intelligence. Three of these aircraft are already used by the Brazilian Air Force (FAB). The P-99 is another Embraer defense aircraft, for marine patrolling, also used by the government of Mexico.
Embraer is the world leader in the production of commercial aircraft of up to 110 seats. The company's commercial aircraft have already been ordered by 50 airlines all around the world. Embraer currently has 1,533 firm orders and 701 options in their portfolio.
Embraer has 37 years of experience in the development and production of aircraft. The company is among the main Brazilian exporters, employs 19,265 people and had, up to the end of 2006, a firm order backlog of US$ 14.8 billion.
The Fair
Embraer has already participated in various fairs in the Arab countries, among them Dubai Air Show, in the Emirates and Algiers International Fair, in Algeria. Idex takes place every two years. In this edition, the fair occupies an area of 38,000 square meters, 37% more than in the previous fair. There are 900 exhibitors from 55 countries.
According to information published by WAM, 40,000 tourists, among them 90 official and military delegations were expected to visit the fair. In the first two days of the event, over 18,000 visitors went to the exhibition. The 2005 edition of Idex counted on 906 exhibitors from 50 countries. The fair received 36,945 visitors and 55 official delegations.
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