Embraer to sell 2,060 passenger jets to North American market

[SAO PAULO] Brazilian aircraft manufacturer Embraer on Tuesday announced plans to deliver 2,060 jets to the North American market over the next 20 years, a deal the company said would net it about US$96 billion at current prices.

The world's third-largest commercial plane maker behind Boeing and Airbus, Embraer said it ultimately hopes to net 35 per cent of all global sales of the 70-to-130 seat passenger jet market.

The company said its sales to the United States and Canada add to an already growing market, as it replaces models being phased out by 2034.

"Despite higher growth rates in other parts of the world, our projections show the US market continuing to dominate the segment because it has such a large volume of existing 70-to-130 seat jets," Embraer president and CEO Paulo Cesar Silva said in a statement.

"However, we foresee room for growth as network airlines look for alternatives to reduce the capacity gap between regional and mainline operations." Embraer sees growth being underpinned as carriers restructure intra-regional hub-and-spoke operations to deploy larger-capacity regional jets such as the E175 in markets traditionally flown by 50-seat jets.

The company noted the E175 enjoyed an 80 per cent share of net orders in North America since 2013.

Since the E-Jets family entered revenue service 11 years ago, Embraer said it received more than 1,560 orders and over 1,100 deliveries for a global market share of some 50 per cent of orders and 60 per cent of deliveries of the 70-to-130-seat segment.

Embraer added that in North America it enjoys a more than 50 per cent market share among aircraft in its segment with over 400 E-Jets delivered.

Last month, the company booked a US$58.9 million first quarter net loss on higher tax costs exacerbated by a weakened real, which has lost a fifth of its value against the dollar this year, following profits of US$112.3 million in Q1 last year.

Embraer in part blamed the latest figures on higher tax obligations stemming from dollar-denominated assets, delivering a US$118 million hit compared with a US$17.7 million benefit in the same period last year.

With the bulk of its revenue pegged in the US currency, a higher dollar could in the longer term benefit the company, founded in 1969 and privatis ed in 1994, although the government retains a stake.

AFP