Embraer Bullish On E2, Targets Growth Across Civil Businesses
Embraer sees demand rising for its E2 commercial jet product line and continued steady sales of its most popular business jets as supply-chain headwinds ease and distractions from the last few years—including the global downturn and unwinding of its failed tie-up with Boeing—fade into history.
“We’re having a big number of [E2] discussions, some are more advanced, some are less advanced,” Embraer Commercial President and CEO Arjan Meijer said during the company’s fourth-quarter (Q4) earnings call March 10. “But I think if you add it up, you’re talking about several triple-digit number of E2s.”
The company’s E2-series backlog stood at 201 aircraft at year-end—194 E195-E2s and seven E190-E2s. One customer—lessor ICBC—is based in China, where the E190-E2 earned type certification in late 2022. The E195-E2 is expected to follow suit, and company executives are confident that the regional jet family can carve out a measurable niche in the growing market.
“We strongly believe that the 190 and the 195 combination in China is a very strong addition to the local portfolio of the [COMAC] ARJ21, which falls slightly below our segment and the [COMAC] C919,” Meijer said. “We believe we have great [aircraft] to help the Chinese connect the many airports that are being created in China that need a very efficient aircraft ... We’re working with airlines already. We have a team in Beijing at the moment to see if we can get campaigns over the line.”
On the E1 family, Embraer sees sales potential for another 500 or so sales, primarily to U.S.-based regional airlines. Pilot supply is expected to be the largest driver in sales timing.
“Obviously, the airlines will be a little bit reluctant at the moment to add aircraft if they can’t bring the pilots in,” Meijer said. “But we believe as soon as they see that going to a better place, that opportunity will come back ... Short term we’ll have to wait for the opportunities. But longer term, we definitely believe there’s a lot of regional capacity to be replaced or added.”
Commercial division momentum adds to an already strong business jet segment that recorded a book-to-bill ratio above 2:1 in 2022. While 2023 may not be quite as successful, the company sees no signs of a major executive-jet demand slowdown.
“We have market interest from all of our customers across all ... product sectors,” Executive Jet Business Unit President and CEO Michael Amalfitano said. “Most specifically, obviously, with the Phenom 300E and the Praetor 600 capturing significant market share growth as we look ahead into that backlog.”
The company has no executive jet delivery slots in 2023 or 2024 and is working to fill the first half of 2025, he continued.
“The market remains very robust in terms of demand,” Amalfitano added. “We’re looking forward to maintain pricing; we are looking forward to a continued robust earnings cash generation for the corporation.”
Embraer’s consolidated revenue of $4.5 billion in 2022 was up 8.2% year-over-year. The company posted an adjusted pre-tax profit of $458 million, a 21% increase.
Commercial revenues totaled $1.5 billion, up 34%, while Executive Aviation earned $1.2 billion, up 27%. Services sales were $1.3 billion, a 28% increase. Its defense and security business generated $447.6 million in sales, up 10%.
“As we have said, since 2020, [the last two years] would be dedicated to the business recovery after two simultaneous crises, the pandemic and the end of the Boeing deal,” Embraer CEO Francisco Gomes Neto said. “The focus will be on growth from 2023.”
“The business turnaround was completed in 2022, and we are ready to start a new growth phase, capturing the company’s full potential in the coming years,” he added. “We still face supply chain challenges this year, but we are optimistic about the company’s future in terms of revenue growth and profitability.”
Embraer delivered 30 commercial aircraft and 50 executive jets—33 light and 17 mid-size—in Q4. That lifted full-year totals to 57 commercial aircraft and 102 executive jets—66 light and 36 mid-size.
Embraer is targeting 60-70 commercial deliveries and 120-130 business jet handovers in 2023. It is forecasting total revenues of $5.2-5.7 billion.
Supply-chain issues will linger for both the commercial and business segments, but executives are confident the worst is behind them. “We’re facing the same supply challenges that the entire industry is facing across aerospace,” Amalfitano said. “We don’t believe that we’re going to be adversely impacted any more or less than anyone else in the sector.”