PAUL LEWIS / WASHINGTON DC
Company sees small regional jet production increase ahead despite glut of secondhand aircraft set to hit market
Embraer is planning for a small pick-up in regional jet production at the end of the year. This is despite the likely postponement of an anticipated large order from US Airways following its bankruptcy protection filing, and fleet cuts by one of its largest customers American Airlines, which is expected to see a deluge of surplus 100-seat aircraft onto the market at cut prices.
The Brazilian manufacturer claims it remains on course to deliver 135 aircraft this year, although it handed over only 60 in the first six months. Embraer is planning for a small increase in production from the end of the year, increasing output in 2003 to 145 ERJ-145 series, 170/175 and Legacy aircraft.
While there is demand for more regional jets, Embraer chief executive Mauricio Botelho admits that "financing for sure" is now an issue. Embraer is understood to have reached an advanced stage of negotiations with US Airways for a large regional jet order, but nothing is now expected to happen before early next year and a financial re-organisation of the carrier.
Botelho claims Embraer would not be affected by American's decision to cut capacity, including the retirement of 74 Fokker 100s decongesting its hub operations, and rather would benefit as the airline and others acquire smaller, more efficient jets. However one industry official admits that with the retirement of older equipment, competition from "give away leases rates" could hurt the sale of new 100-seat regional jets like the stretch 190/195.
The company has already been hit by GE Capital Aviation Services' willingness to release TAM's fleet of 40 Fokker 100s at low rates. The airline had previously announced plans to replace the aircraft with 20 new 195s, and an Airbus A318. The deal, announced in mid-2001, was never finalised as a result.
Embraer reported a net profit of $36.8 million for the second quarter ending 30 June, down 60% on the second quarter in 2001. Sales for the three months totalled $590 million, down from $823 million for the same period last year.
The sale of fewer regional jets was partially offset by the delivery of the new Legacy corporate version of the ERJ-135 and an expansion into repair and overhaul.
Source: Flight International
