4 MAY 2020

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Article from BTNews 4 MAY 2020

Embraer and Aviation Week

Still seemingly in a state of shock following Boeing’s announcement that its Master Transaction Agreement (MTA) was null and void the Brazilian company last week opened up with the US magazine Aviation Week regarding its future. (See Boeing drops Embraer BTN 27 April)   

Embraer’s commercial operation has shifted focus to realigning with the rest of the company and conserving cash, with new-product development – including a notional turboprop – put on hold while the business regains its footing amid the Boeing deal collapse and coronavirus crisis, Embraer Commercial Aviation president and CEO John Slattery said.

“Our mind-set is one Embraer, one team,” he said in his first public comments since the Boeing deal fell through.  He acknowledged that the one-team approach will require organizational changes. “There’s replication now ... some of the more obvious synergies at the edge, we will review and possibly revert over the next few months.”

Mr Slattery noted that sudden glut of aircraft in global airline fleets and shifting demand trends are triggering landscape-altering questions for all aircraft manufacturers.  “Chief among them: when will it make sense to invest in new products, and how will the pandemic’s ramifications change what airlines will want?”

Slattery emphasized that Embraer’s post-Boeing-breakup strategy does not include seeking out a new partner. He stopped short of saying that Embraer is not open to being approached, however.

Slattery acknowledged that the company is “burning cash,” but the company raised $600m in March and has the “the capabilities” to bring in more. “From an Embraer liquidity perspective, it is not something we’re concerned about.”

Turning to the market, Slattery said the consensus he’s seeing among senior air transport executives is that the recovery of airline businesses will take three-to-five years, but it will be uneven. Smaller aircraft and short-haul flying is likely to bounce back more quickly as airlines focus on trip costs over capacity. Long-haul flying, particularly between countries, will likely take longer to recover, especially if the patchwork of responses for protecting passengers from COVID-19 does not become more streamlined, which would provide more comfort to would-be travellers.

Slattery emphasized that while Embraer’s perfect-world commercial line-up includes both the Pratt & Whitney PW1000-series-powered E175-E2 and E-195-E2, the smaller model’s incompatibility with US airline scope clauses means the GE Aviation powered-E175, which is lighter and meets scope restrictions, has staying power.

Slattery said the decision to terminate a flagging aircraft programme “is not a unilateral decision” an OEM makes, but suggested that market forces, underscored by the empty order book, could doom the E175-E2.

https://embraer.com

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