Embraer CEO Sees Narrowbody ‘Window of Opportunity’

Embraer CEO Francisco Gomes Neto has not had a long career in the aerospace industry, and soon after he joined the company as CEO in 2019 he had to manage through a double crisis: the COVID-19 pandemic and Boeing’s abandon­ment of the commercial aircraft joint venture in 2020. Follow­ing reintegration of the commercial aircraft business, Embraer is exploring its next steps. Jens Flottau, executive editor for commercial aviation, spoke with Gomes Neto at Embraer’s headquarters in Sao Jose dos Campos, Brazil.

AW&ST: Boeing is weakened by its internal problems; Airbus is not in a rush to bring new products to the market. Isn’t there a window of opportunity now for you to finally disrupt the narrowbody duopoly?

You guys know very well that we can’t launch an aircraft from one year to the next. It takes seven, eight years to launch an aircraft. And we have [to manage] this technology transition. Today the airlines are suffering because of the [maturity shortfalls of] engines, but they are getting more and more mature. A new engine will come, but we don’t know when. We are in conversations with the engine suppliers, all of them. They have plans. We see this window of opportunity, of course, just like the market, but we need to better understand the scenarios. We don’t want to put the company at risk. If we do some movements in the future, we have to be financially very stable to finance this together with other partners. Commercial aviation is super-important for Embraer and will remain so. Hopefully one day I can talk to you and give you a different answer.

But Embraer is working on technologies for the next program. 

We are making studies all the time; we are investing in new technologies to be ready when, one day, we decide to move. We are talking about the propulsion system, autonomous flight to simplify the operation [and] airframe competitiveness. We are studying new wings [and] new fuselage designs. We are working on all those fronts to help us apply these technologies to a new product. I know the anxiety in the market, but we don’t have a concrete plan yet to share with you. Our engineers are working on it.

You could also invest in executive aviation. 

Yes, we currently go up to midsize and super-midsize aircraft. We are doing very well. The Praetors are growing. But we have at least three levels [of executive aircraft] above us, which are also an opportunity for us.

Embraer is slowly growing commercial output to previous levels. How high can you go? 

In the past, the maximum was around 130 aircraft per year—of course, that was only E1s at the time. Now we have a combination of E1s and E2s on the same line. But I believe we can be in that same range with the structure we have today, maybe a little lower. We are making punctual investments to increase production capacity year after year. But the biggest limitation we have today are the engines, not our internal facilities. We could do more this year and next year, and the customers would take more. We delivered 19 E2s last year, and this year it will be 37, so we are growing a lot, and we plan to grow more next year. We delivered 64 aircraft last year, this year it will be 72-80, and we should be at 100 in 2026. We have many good ongoing campaigns.

Which could become deals announced at the Farnborough Airshow? 

We are very anxious for the deals to be finalized. Sometimes it takes longer than we expect. But we closed Mexicana, which is good because it showcases the E2 in Mexico, and there are many other airlines in Mexico which are potential customers. We are also working in the U.S. with some airlines. Farnborough will be much better in terms of announcements than the other air shows.

Following the breakup of the commercial joint venture with Boeing, you are still awaiting a legal settlement. 

Yes, we had expected that this would be closed by the middle of this year, which is now. It depends on the judge and the arbitration court. Maybe it comes before the end of the year.

Once there is a settlement, could you imagine moving closer to Boeing again and cooperating where it makes sense? 

Never say “never.” Things change; companies and people change. But at this point we don’t see any kind of cooperation. With the C-390, we are going down a different path. The carveout of commercial aviation was really painful. We had to carve it out and then reintegrate it. We spent a lot of money and resources; we lost one year. When I arrived in 2019, the organization was focusing on this process. We could have focused on selling E2s or getting efficiencies in the organization, as we have done from 2020 onward.

In defense, you have been working on export sales of the C-390. Where do you see the best opportunities? 

There are good prospects in India and Saudi Arabia. India has decided to replace older aircraft in that segment. We believe the C-390 is the best option. I was not here back then, but Embraer already started the process years ago. An aircraft like this takes $8-9 billion to be developed and takes eight or nine years, and now the C-390 is ready. In India, it is now about timing. We are very well positioned against the [Lockheed Martin] C-130 and the [Airbus] A400M in that race. We have been working closely with Saudi Arabia as well to replace old C-130s. We are in conversation with the Royal Saudi Air Force and the ministers about a broader cooperation not only with the C-390, but also with the E2s and the [electric vertical-takeoff-and-landing vehicles (eVTOL)] and executive jets. These can be big orders.

Are you concerned that Saudi Arabia is taking on too much? They are trying to build everything at the same time—airlines, airports and the infrastructure. 

We are very pragmatic at Embraer and look at what is possible. We have made a lot of market studies in Saudi Arabia with them as well, and we believe that [an order for] 20 C-390s is very reasonable. They operate 50 [C-130s] today, so that would just be 40% of the fleet. The E2s can also do a lot to improve connectivity within Saudi Arabia and in the region. The aircraft can fly up to 6 hr. and can offer more frequencies. The eVTOLs fit very well with the city of the future, Neom. It is not easy, but it is a good opportunity for Embraer and for them as well, if they want to develop their aerospace industry further.

How does India differ? 

India in the short term is more about the C-390. In commercial aviation, they are investing more in bigger narrowbodies. But there are a lot of E1s flying, and at one moment they will look at the E2, maybe not in the short term. In Saudi Arabia, maybe we can do everything at once.

India will want local manufacturing. China would expect the same if it ordered a big number of E2s. How can you manage all of these requirements? 

We have to make sure we can execute these programs and strategic partnerships. And then the commercial department is working on sales campaigns. Then we have to make sure that we have the production capacity. But we don’t have that problem yet, which is another advantage for us. We still have production slots available from 2026 onward.

If you want to be able to sell the KC-390 in the U.S., you will have to develop a boom. Are you prepared to do that? 

We still believe that this agile tanker is a good option, but we are also looking at other opportunities. We have a strategic project for the U.S. We are reinforcing our defense team in the U.S. in order to see what we can do to introduce the C-390 in the Air Force or Navy or any other opportunity. The C-390 can help them a lot to improve the efficiency and productivity of the fleet. For the tanker, we are considering developing the boom, if necessary. We are now exploring other opportunities in the U.S. that can help us to introduce the aircraft and develop the boom. We are not working with L3Harris anymore.

How concrete are your plans for maritime patrol versions of the C-390 and the E2? 

We are talking to the Brazilian Air Force about that. They have an interest. We are exploring alternatives with them, but we don’t have a concrete project yet. It can be either the C-390 or the E190/195 for that surveillance application.

You teamed up with Saab to promote Gripen and C-390 deals. Where does this partnership stand? 

Two years ago, we signed an agreement with Saab to help each other. We would help them sell Gripens in Brazil and Latin America—Colombia, for example—using the investments we both have made in Brazil. They help us sell C-390s in Sweden and other countries where they can combine with the Gripens. It is moving well. Both are great products.