Embraer’s commercial aviation segment accounts for more than 60 percent of all company revenues. Embraer has more than 90 customers, including 30 of which are airline companies on five continents. To date, more than 900 regional jets from the ERJ 145 family are in service. ERJ planes typically offer 37 to 50 seats and are designed to carry passengers from small cities to larger airports for connecting flights. United Airlines uses the 50-seat ERJ from the USA to Mexican cities such as Torreon, Queretaro, and Veracruz. Despite rapid growth in this segment, it is Embraer’s belief that this segment has reached maturity in the current markets where they operate.
To create new market share in the commercial aviation segment, Embraer is now producing a larger E-jet in four different models. The E170 and E175 models are designed for 70 to 88 passengers whereas the E190 and E195 jets are designed for 93 to 124 passengers. The company likes to promote the E-jet as a product that “taps the gap” between regional and larger aircraft. For example, a flight from Atlanta to Boston could easily be accommodated by an E-jet around noon when demand is lower because most flight demand is during the morning and afternoon hours. Advantages to the E-jet is there is no middle seat and they are large enough to stand up as a passenger walks down the aisle, just as one would be able to on a Boeing 737 or Airbus 320, unlike competitor Bombardier’s planes where many people have to bend over as they make their way to their seat. A drawback with the E-jet is that it does not have the fuel capacity to fly across the USA. But forecasts indicate that demand will grow for E-jets, as indicated by Republic Airlines paying Embraer to $4 billion to provide E175 jets.
Embraer’s second most profitable segment is the executive aviation, accounting for 19 percent of all revenues. Embraer entered this market in 2000 and rolled out the first plane, a Legacy 600, in 2002. Currently, Embraer provides seven different executive jet options, including the Phenom, Legacy, and Lineage models. The Phenom 100 is the smallest jet offered in the segment and carries 4 passengers up to 1,200 nautical miles. That plane retails for just under $4 million. Larger than the Phenoms are Embraer’s Legacy line of jets. The Legacy 500 can carry 12 passengers up to 2,800 nautical miles and costs around $18 million. The larger Legacy 600 and 650 aircraft are capable of carrying 13 passengers over 3,000 nautical miles at altitudes of 41,000 feet. Purchase price is around $27 million.
The Lineage is a variation of the commercial Embraer 190 and is designed with an executive floor plan and additional range by adding a fuel tank. The aircraft can carry 19 passengers upward of 4,500 nautical miles with a price tag of more than $50 million. Currently less than 20 of these aircraft have been built, compared to more than 200 Legacy 600-style planes. All Embraer executive jets can be customized to include showers, bedrooms, or standard commercial jet seating layouts.
Defense and Security
Revenues from Embraer’s Defense and Security segment increased 44 percent in 2012. Embraer’s Defense and Security segment accounts for 15 percent of revenues. Embraer provides 48 different nations with services and products contained under the Defense and Security’s umbrella, including supplying the Brazilian Air Force with more than 70 percent of its fleet. In addition to traditional manned aircraft, Embraer is also engaged in unmanned aerial vehicles and public security systems. These new endeavors were acquired through acquisitions and partnerships with existing firms.
One of Embraer’s newer crafts, the Super Tucano, replaced the Tucano that was first produced in 2003 and continues to be produced today. The plane is a single-engine turbo propeller that resembles a World War II fighter plane to the untrained eye. The plane is designed for light attack and aerial reconnaissance in low-threat environments as well as serving a role in pilot training. The Embraer 99 is the military version of the ERJ 145 used in early warning and control. The plane differs mainly from the ERJ 145 in that it provides 20 percent more thrust. The firm also provides several variations of the Embraer 99, all with slightly different features and purposes. The Embraer KC-390 is a twin-engine military jet aircraft designed for troop transport. That plane’s first flight is scheduled for 2014 with introduction scheduled for 2016. The company currently does not produce a fighter jet or bomber.