Diversification into business aviation and defense will let Embraer grow without forcing the company into direct competition with Airbus and Boeing, says President and CEO Frederico Fleury Curado.

“The fact that defense can grow to be a solid business...and business aviation to be another important pillar is embedded in our decision not to try to engage in larger commercial aircraft,” he tells Aviation Week in an interview after the company launched its next-generation E-Jet E2.

Although two of the new three-aircraft E2 family are larger than Embraer’s current E-Jets, they stay below the markets served by the A320NEO and 737MAX, offering 88- to 132-seat capacity.

“Diversification is a need for us,” Curado says. “I don’t see either [defense or business aviation] being larger than commercial aircraft, at least on the visible horizon, but they can be important enough. They are both now above $1 billion businesses.”

When it comes to moving up in the business aviation market, “the thought process is similar to engaging in larger commercial aircraft,” he says. “Can we or can we not offer something game-changing that will move customers from Gulfstream, which we see as the benchmark?

“We have to bring something different, something special. The question of whether we can do something like that is a little bit ahead in the future. Certainly that is something we keep looking at, but so far we are comfortable with where we have invested, and that our portfolio from the Phenom 100 to the Legacy 650 gives us a reasonable footprint in the market.”

On defense, Curado says that development of the KC-390 tanker/transport for the Brazilian air force is 20-25% complete and “pretty much on time and budget. First flight is planned towards the end of next year. So next year we will sit down with the air force and talk serialization. That will set the price and give us a basis to approach other customers and begin our commercial efforts.”

Embraer won the competition to lead the first phase of Brazil’s Sisfron border surveillance program. “We need to make sure we win the next ones,” he says. Sisfron could also create opportunities for Embraer’s Harpia unmanned aircraft joint venture with Israel’s Elbit and Avibras of Brazil.

The SisGAAz coastal-surveillance program is still in definition, ”but in Brazil, Embraer is the company with the most C4I capability. There will be some sort of requirement for Brazilian content, but we cannot take it for granted. We have to compete and win as we did on Sisfron.”

In April, Embraer and AgustaWestland dropped plans to create a joint venture to produce helicopters in Brazil. “We had a memorandum of understanding, but we could not come to terms on fundamental points. It was very peaceful; we agreed to disagree,” he says.

But “the business opportunity is still there” to produce helicopters in Brazil, Curado says. “Our willingness to somehow find a way to be part of that is still here. It will be a question of whether we can put together a strategy to seize that opportunity.”

While losing U.S. bidder Beechcraft continues to press for political action to curtail Embraer’s contract to supply A-29 Super Tucano light-support aircraft to the U.S. Air Force for the Afghans, Curado says he is “not worried” and Embraer is focused on executing the program and delivering the aircraft.

“We know we have a customer, a commitment, a very tight schedule and a big responsibility,” he says. “The U.S. Air Force has visited us in the U.S and it is clear to us that the aircraft is an integral part of their withdrawal from Afghanistan.”