Embraer's first public flight of its EMB-145 was acclaimed by observers.
Graham Warwick/SAO PAULO
JUDGING BY the reactions of regional-airline executives attending the 18 August roll-out and first public flight of the EMB-145 regional-jet, Embraer has produced a potential winner - if the newly privatised Brazilian manufacturer can deliver the promised performance at the quoted price, and with the support customers now demand.
A straw poll conducted at the roll-out, at Embraer's Sao Jose dos Campos plant, indicates that the regionals are ready for the aircraft. They are attracted by its price, and impressed by its quietness, but the principal reason for their enthusiasm is simple: passengers prefer jets. Operators have been hit by a loss of public confidence in turboprops, and an affordable regional jet is an answer to their prayers.
Embraer is well placed to meet the demand. It is aiming the 50-seat EMB-145 principally at operators of its EMB-120 Brasilia 30-seat regional-turboprop, more than 300 of which have been sold. It is using the same tactic which sold the Brasilia so successfully - price. At $14.5 million, the EMB-145 is some 20% cheaper than the Canadair Regional Jet.
Company insiders believe that Embraer could have as many as 200 firm orders for the aircraft by the end of 1995. The company now holds 18 firm orders, 16 options and 127 letters of intent (LoIs), but several of the LoIs are scheduled to be converted to orders following the first flight, says senior vice-president, commercial, Frederico Curado.
Break-even point is 200-250 aircraft, which the company expects to reach between 2001 and 2003, depending on production rate, says senior vice-president, programmes, Satoshi Yokota. Embraer and its partners plan to reach a three a month production rate by 1998, but this could be increased to four a month if the market demands, he says.
Curado expects EMB-145 sales to follow the pattern set by the EMB-120 - 60% into the USA, 30% into Europe and 10% elsewhere. Most of the LoIs are for export, he says. Brazilian export financing, a major factor in the Brasilia's success, is available for the EMB-145 and the Embraer board is discussing the possibility of setting up a leasing arm, he says.
Domestically, where the regional-airline industry is booming following deregulation, the company faces the hurdle of a sales tax which forces it to export aircraft to overseas financial organisations which then lease them back to Brazilian operators. Five Brazilian airlines hold LoIs for 22 EMB-145s and the Government is under pressure to repeal the sales tax.
Embraer has not always been so well positioned. When it unveiled the EMB-145 project in 1988, the first flight was planned for 1992. A lengthy redesign and the protracted privatisation process delayed the programme and Embraer's financial difficulties led it to seek partners. The $300 million development cost was divided between Embraer (34%), risk-sharing partners (33%), suppliers (10%) and the Brazilian Government (23%).
Answering questions about the resources available to produce the EMB-145, president Juarez Wanderley says that $180 million in new capital has been injected by shareholders since the privatisation in December 1994. Negotiations are under way for a further $140 million injection, which he hopes can be increased eventually to $200 million.
Redundancies made since the privatisation mainly affected management, with Embraer holding on to hard-to-replace engineers. Wanderley says that the 3,800-strong workforce is now sized for the workload expected over the next one to two years, with no further cuts planned in the short term, he says. In fact, insiders say that more production workers may have to be hired.
Curado believes that the time taken to privatise Embraer has not hurt the manufacturer's image in the marketplace. The delay in bringing the EMB-145 to market did not seem to dampen enthusiasm for the aircraft from prospective customers at the roll-out.
Even US regional Comair, an early option holder which defected to the Regional Jet when it became clear the EMB-145 would not be available in time, now believes that there could be a place in its fleet for the aircraft, alongside the 70 Regional Jets it plans to acquire.
Several challenges remain, not least achieving certification, launching production, meeting the price and performance promises, supporting the aircraft and providing customers with a growth path.
Embraer's confidence has been boosted by the EMB-145's performance since its first flight on 11 August. The aircraft was publicly displayed after just four flights and 7h flying, during which the aircraft was flown to 34,000ft (10,300m) and Mach 0.69. The flight display was spirited, and observers were impressed with the quietness of the Allison AE3007 turbofans.
US and European certification is scheduled for October 1996, and four aircraft are to be delivered by the end of 1996, to launch customers Flight West Airlines of Australia and France's Regional Airlines. Senior vice-president, engineering, Luiz Carlos Affonso admits that achieving European certification by that date will be a "struggle", as Embraer was late beginning the process, but discussions with the Joint Airworthiness Authorities are going well, he says.
Looking to the future, Affonso says that Embraer is already studying growth options for the EMB-145. These centre on a new, wider, fuselage offering four-abreast seating, as the stretch potential of the present Brasilia-based three-abreast cross-section is limited, he admits.
Source: Flight International
