Embraer is confident it will finally secure US Federal Aviation Administration certification for its Phenom 100 very light jet before the end of November and is equally confident it will certificate the Lineage 1000 ultra-large business jet by year-end.
The Brazilian manufacturer's chief executive Fred Curado says all that now remains to be completed in the Phenom 100 certification programme are "reports on some components" and "we expect certification to happen before the end of this month - in a couple of weeks or so".
Curado acknowledges that Embraer's failure to complete certification in the third quarter as originally scheduled has dented the manufacturer's quarterly earnings because contributions were not made by Phenom 100 risk-sharing partners - these would have been used to offset research and development costs. But Curado says Embraer is still expected to attain its profit targets for the full year because these contributions will now be made in the fourth quarter, pending certification.
Since flying the aircraft for the first time last year, and as late as early September, Embraer has insisted it would meet its target of certificating the Phenom 100 before the end of the third quarter. Curado now says "we really feel comfortable" certification will take place in November. "This is what the programme director assures me every day - before the end of the month," he says.
Embraer for now has not altered its original plan for delivering 10 Phenom 100s before the end of the year and another 120-150 aircraft next year, but Curado acknowledges it is now reviewing whether this is still feasible. "We're in the process of doing an exercise to see whether with this two- to three-month delay in certification we can accomplish that," he says.
Despite the slip in certificating the Phenom 100, Curado says certification for the Phenom 300 light jet is on schedule for "about a year from now or hopefully a little less than a year from now". Two prototype aircraft are flying and the light jet made its public debut last month. "For the final sprint of the Phenom 100 there's a natural concentration of attention of resources to final certification, which will be released to dedicate to the Phenom 300 as soon as we accomplish our type certification," Curado says.
He adds that certification of the Lineage 1000, which was also originally scheduled for mid-2008, should be completed next month. "We're finalising the final installation of the fuel system, so as far as hardware goes we have maybe a two or three week effort still. Then it's down to paperwork," he says. "We're very confident we'll have this in December."
The aircraft being used for certification returned from the completion centre about a month ago and will also be delivered as the first production aircraft following certification. The Lineage 1000 is a derivative of the Embraer 190.
Meanwhile, Curado echoes comments made last month by executives at rival Cessna and Gulfstream that the intake of new business jet orders is starting to slow, but the record backlogs should be sufficient to ride out any downturn.
"The general outlook for next year is not that positive," Curado acknowledges. "The last few weeks we've seen an important reduction in activity. I think this is now a time for us to hold on to a solid backlog as I think we'll have a dry season for some time. When I say 'we' I mean not just Embraer, but the whole industry."
But Curado is quick to add that Embraer is sitting on a $7 billion backlog and, given the orders already secured for this year, it is assured sales will surpass deliveries in 2008. The current backlog includes 850 Phenoms and over 20 Lineages.
"We have a backlog stretching out now through 2012 and in some cases 2013. We don't see a huge risk," he says, adding that people are already asking about the chances of advancing deliveries through defaults. "So we feel confident about our backlog."
Embraer, Curado adds, is in particularly good shape because it is only now starting to ramp up production of the Phenom and Lineage lines. "We should certify the Phenom in a couple of weeks and the Lineage in December, so 2009 will be year where we will just be starting to deliver our first airplanes. We have a very strong backlog in those families - and the Legacy is pretty much sold out for next year as well."
But the honeymoon period for business jets is clearly over and Embraer plans to soon release a new forecast which will reflect the new reduced level of demand. "There are several signals out there showing there will be a reduction in demand," Curado says. "This year and 2009 will probably still be a good year in terms of deliveries because everybody has a strong backlog, even with potential cancellations. I think in 2010 you'll probably see a drop in deliveries. Back to the Embraer case, we're sitting on a backlog that stretches out significantly into the future. We tend to believe we have reasonable protection for the short and medium term."
Source: Flight International
