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Embraer Offers Integrated Solutions for the VLJ MarketplaceEmbraer Offers Integrated Solutions for the VLJ Marketplace

Embraer Offers Integrated Solutions for the VLJ Marketplace

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With its May 3 announcement that it will design and build a very-light jet (VLJ) for the owner-flown and entry-level jet market, Brazilian manufacturer Embraer, known for its commuter and regional aircraft, begins a major thrust into general and business aviation.

Starting in the 1940s with nothing but a dream and the strong conviction that the future offered great possibilities, visionaries obtained help from the Brazilian government to create a company that today is world renowned as the production leader in regional jets. Embraer, owned by private shareholders since 1994, is Brazil's second leading generator of foreign exchange, with 75 percent of its revenues coming from sales of the EMB 135/145 and the larger EMB 170/190 series of airliners. Nearly 7 percent of its business derives from sales of the Embraer Legacy, a corporate version of the EMB 135 regional jet. Sales to the military and services account for the rest of Embraer's income. But that product mix is about to change, according to Luis Carlos Affonso, senior vice president, corporate aviation market.

"We have a strategy of growth and diversity," said Affonso. "In 10 years we plan to generate 20 percent of our revenues from general and business aviation."

Embraer's roots are closely related to general aviation. The company's early activities involved assembling Piper aircraft as it was designing light transports, such as the 19-passenger EMB-110 Bandeirante turboprop twin, for the Brazilian Air Force. When the U.S. airlines were deregulated in 1978, Embraer offered the Bandeirante, which quickly became the aircraft of choice for emerging commuter air carriers. The EMB-120 Brasilia, a pressurized 30-passenger aircraft designed specifically for commuters, followed in the early 1980s; the EMB-145 and EMB 135 regional jets emerged in the 1990s; and the EMB 170/190 series entered service recently. Products for the commercial airlines represented all of Embraer's non-military sources of revenue until the Legacy was introduced to corporate customers in 2000 as the first stage in diversifying the company.

"General and business aviation are not the same as the commercial marketplace," remarked Affonso. "With the Legacy we learned enough about the differences to launch other products. First of these will be the Embraer VLJ, followed by the Embraer light jet. We are creating a new organization within our company to better understand and service the marketplace that these and future Embraer business aircraft will address."

Affonso emphasized that the Embraer VLJ and LJ were just the start of the Brazilian manufacturer's strategy for being a more substantial player in general and business aviation. "We do not want to look like a commercial supplier trying to sell its designs in another market," he said. "We will keep what is best from commercial aviation, but we will offer unique values that apply to non-airline operators."

"Our strategy is to offer everything that owners and operators of our new jets require," continued Affonso. "When an owner-pilot purchases our VLJ, for example, we will provide financing, training, servicing, and Embraer service centers. The avionics and systems will be easy to operate. We will facilitate the introduction of our VLJ to the owner-pilot community. This is what we call our Integrated Solution, and we will have more details within a few months."

Preliminary data indicate the Embraer VLJ will be somewhat larger than the current crop of VLJs, offering club seating for four and a full-width, completely enclosed aft lavatory. A non-lavatory interior will accommodate six forward-facing passenger seats. At $2.75 million in today's dollars and first deliveries expected in 2008, the Embraer VLJ also is slightly more expensive. Powered by two PW617 turbofans, which deliver 1,615 pounds of thrust apiece, the aircraft is expected to cruise at 380 knots and require 3,400 feet of runway for takeoff under sea level, standard day conditions. So far, however, a prototype is not under construction.

Embraer's current plans for its VLJ are focused on the owner-flown market, which the company believes will absorb in total about 1,400 aircraft within the next 10 years. If there is a robust "sky cab" market, Affonso thinks the demand for VLJs could be as high as 10,000 aircraft during the same period, in which case Embraer will have a highly attractive offering with its new aircraft. - John W. Olcott


Posted Wednesday, May 25, 2005 11:24:55 AM
Topics: Aviation Industry, Financial, Diesel

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