Embraer, Boeing still locked in tie-up talks

Singapore

EMBRAER is still in talks with the world's biggest plane-maker, Boeing, on a proposed tie-up, with no formal proposal on the table as yet, the Brazilian plane-maker said at the Singapore Airshow on Wednesday.

This follows media reports that Boeing was looking to acquire up to 90 per cent of a new venture that would include Embraer's commercial aircraft arm. However, the Brazilian government has a so-called golden share in Embraer and has to be onboard with any deal in order for it to go through.

"At this stage, Embraer has not received a proposal and the only reason for that is that the parties continue to work on identifying structures that might work," said Embraer chief executive (commercial aviation) John Slattery, adding that if a proposal is received, it will be reviewed and subject to the relevant authorities and Embraer's shareholders.

Talks of a potential deal between the duo emerged after Airbus announced last year that it was taking up a majority stake in Canadian planemaker Bombardier's C-Series programme.

Meanwhile, the Brazilian plane manufacturer also said on Wednesday that it is striving to boost the number of E-Jet operators in this region to 20 by 2020, up from 14 today. In this respect, it is targeting larger carriers as well as big low cost carriers. Globally, it is aiming to grow to 100 E-Jet operators.

Dubbed the profit hunter, the E190-E2, which is on display at the Singapore Airshow this week, will be delivered to launch customer Norwegian carrier Wideroe in April.

"Fifty per cent of the customers that the team and I are meeting - even in this region - are non-Embraer operators today," Mr Slattery said, adding that Embraer is at an inflection point with the entry of the E190-E2 jet into service this year. He expects that "marquee names" will come onboard once the aircraft is certified.

Embraer projected that airlines in the Asia-Pacific will take delivery of 3,010 new aircraft in the 150-seater or below market over the next twenty years; this translates to 29 per cent of the 10,550 new planes that will be needed worldwide. Some of the demand in the region will be for replacement aircraft, given that there are over 250 jets in the 50 to 150 seat category over ten years old.

"The overcapacity and intense competition in the region has prevented airlines from delivering higher profits," said Cesar Pereira, vice-president (Asia-Pacific) for Embraer Commercial Aviation. He argued that the E190-E2 would enable airlines to open new markets, including by taking on less crowded routes to second and third tier cities so as to protect yields.

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