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Embraer's employees attend the launch of the E195-E2 commercial jet's first prototype in Sao Jose dos Campos, Brazil.   © Reuters
Business

Brazil airplane maker Embraer sees growing demand in Asia

CEO stresses company's experience as advantage over Asian newcomers

HIDETAKE MIYAMOTO, Nikkei staff writer | Latin America

SAO PAULO -- Brazilian aircraft maker Embraer is expecting strong demand in emerging economies especially in Asia, the chief executive officer of the Sao Paulo-based company said.

Embraer CEO Paulo Cesar de Souza e Silva

"There are many uncertainties in emerging markets. However, we still see them as very good markets, for instance, China," Paulo Cesar de Souza e Silva said during an interview with The Nikkei. "China's aviation market is growing at a double-digit rate. It's very fast growth. India is also growing, but there are concerns about Turkey. Generally speaking, the market is still robust. Traffic is growing especially in the Asia-Pacific region."

Embraer is the world's biggest maker of commercial airplanes comprising 70 to 130 seats, with more than 50% market share.

The first model of the E-Jet E-2 family, which will succeed Embraer's mainline E-Jet series, is planned to have a seating capacity of about 100. Speaking about delivery of the model to customers, Silva said, "We are on time. Everything is running smoothly. [It is set for] anytime between January to June in 2018."

Embraer is planning to begin delivery in 2021 of its 90-seat E-175 E-2, which will directly compete with Japanese manufacturer Mitsubishi Aircraft's Mitsubishi Regional Jet, which is expected to be delivered in the middle of 2020. "We want to launch as fast as possible and try to get more clients and market share," Silva said.

The E-2 aircraft has already successfully completed its maiden flight. 

The plane adopts U.S. aerospace company Pratt & Whitney's cutting-edge engine. In addition, the E-2 is the most efficient plane in its market sector as its energy consumption has been cut by more than 20% per seat in comparison with its predecessor model, Silva said.

Between 2016 and 2035, Embraer expects the market for small commercial planes to be about 6,400 units with a total value of $300 billion. As of last December, Embraer had an order backlog of 450 planes, including 275 in the E-2 family.

Embraer and Canada's Bombardier are the two largest manufacturers of small commercial planes. Although Mitsubishi Aircraft and Commercial Aircraft Corp. of China have newly entered the market sector, both are struggling with development of their aircraft.

Silva said Embraer will retain its competitive edge over the new entrants. "We are not surprised. We know this is challenging process. We have almost 50 years of experience," he said.

Embraer has escaped the effects of Brazil's economic slump because it earns more than 90% of its revenue from overseas markets. 

When asked about U.S. President Donald Trump's protectionist trade policy, Silva said, "So far, there is not much information. We cannot speculate about the details of the plan."

But, he added, "We have a big presence in the U.S. We employ 2,000 people there and buy lots from the U.S. About 1,000 commercial jets and 500 business jets of ours are in operation in the U.S. Our link and partnership with U.S. is huge."

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