By Gabriel Araujo
SAO PAULO (Reuters) -Embraer is studying new products that could drive long-term growth, but these would have to be considered in light of the Brazilian planemaker’s finances, CEO Francisco Gomes Neto told Reuters.
In recent years, the company has often been linked to the potential development of larger commercial aircraft to compete directly with Boeing and Airbus, but Gomes Neto noted there is also demand for larger executive jets.
“Our market intelligence and engineering teams are studying all alternatives. At some point, we’ll choose which path to take,” he said in an interview on Tuesday.
DEVELOPING NEW MODELS BRINGS HIGH COSTS
New airplane models typically require billions of dollars in capital expenditures and take years to enter the market. While Embraer’s debt levels are under control, jetmakers including regional jet competitor Bombardier have a history of financial struggles linked to new product launches.
Embraer focuses on the regional commercial segment of 70 to 140 passengers. Its E2 family competes with Airbus’ A220, but stands below the core 150-plus-seat market dominated by Airbus and Boeing.
In the business jet market, the firm competes in the very-light to super-mid-size categories, with its largest Praetor 600 model seating up to 12 passengers while firms such as Dassault offer bigger aircraft.
Future projects, Gomes Neto said, depend “on the product we believe we can develop, the funding strategy that doesn’t jeopardize the company’s financial capacity, and our customers.”
“Over the next few years, we’ll focus on investing in new technology and maturing these studies around what Embraer’s future products will be,” he added. “We don’t have a timeline for that decision.”
The planemaker expects to reach $10 billion in annual revenues by 2030 and has enjoyed strong demand for its portfolio, with its shares more than quadrupling in value since late 2023.
SUPPLY CHAIN SNAGS
The executive said that Embraer has secured the parts it needs to assemble aircraft it had targeted for delivery by year-end, but many arrived late, meaning that deliveries will be concentrated in the fourth quarter.
The industry has grappled with supply chain bottlenecks in recent years that affected output plans and delayed deliveries.
“Next year will still bring some challenges,” Gomes Neto said. “On average, it’s improving, but we still have some specific parts that will be difficult.”
He said previous delays and other issues with the RTX’s Pratt & Whitney engines equipping the E2 family have been “practically resolved.”
“This year we didn’t face any problems receiving GTF engines, and we’re not anticipating issues for next year either,” he said.
(Reporting by Gabriel Araujo; Editing by Christian Plumb, Alexandra Hudson)
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