First Lineage Customer

[P-air]

INDUSTRY

[12/15/2006 - 10:55]

New Embraer aircraft to debut in the Middle East


The first person to receive the Lineage 1000 executive jet, the most expensive produced by the Brazilian aircraft maker, will be an Arab client. The aircraft was released this year and deliveries should begin in 2008. In commercial aviation, the company informs that it is supplying the largest part of the region's demand for aircraft for 70 to 120 people.

Alexandre Rocha*

São Paulo - The first unit of the Lineage 1000, the most expensive aircraft produced by Embraer, launched this year, is going to be delivered to an Arab client in 2008. "The aircraft has the profile of the clients in the region," said on Thursday (14) the vice president for the organization's executive aviation market, Luís Carlos Affonso, during a luncheon offered to journalists in São Paulo. Based on the Embraer 190 platform, the second largest commercial aircraft produced by the company, the Lineage is a large long-haul executive jet that costs US$ 41 million.

According to Affonso, magnates in the region prefer spacious aircraft with large cargo compartments. "The Lineage may have a king sized bed and shower, it is like a hotel room. It is a 190, which has space for 100 people, converted to transport just 13," he said. Another advantage, according to him, is the autonomy: the jet may fly 7,500 kilometres non-stop, enough to go from Dubai, in the United Arab Emirates, to London.

Affonso did not reveal the name of the client, nor his country of origin, but he said that most of the orders placed for the model are from the region. According to him, total orders for the aircraft are already between five and ten units, but the company does not state the exact number. The good acceptance of the jet in the Arab world is considered natural, as the taste of the local potential customers was considered when developing the aircraft, as ANBA disclosed in an article published on June 12 this year.

"Due to the characteristics of our aircraft we are well positioned in the region," stated Affonso. Apart from the Lineage, the Legacy 600, a medium-sized executive jet, has been successful among the Arabs, not just among magnates, but also among companies that use the model for the transport of executives. "The cabins of the aircraft cover on average two thirds of the size of the Legacy. The large cabin is a key characteristic for the region," he said. The Legacy costs US$ 24.5 million.

Commercial aviation

But it is not just in executive aviation that Embraer has been having success among the Arabs. From last year to date, the company sold to companies in the region commercial aircraft in the 170/190 family, with capacities for between 70 and 120 passengers, being 15 to Saudi Arabian Airlines, seven to Royal Jordanian, six to EgyptAir and one to Sirte Oil Company, a Libyan organization. "Aerial transport in the region should grow between 6% and 8% a year. There is potential to sell around 100 aircraft the size of ours (up to 120 seats) in 10 years," stated the vice president for the commercial aviation market and future president of Embraer, Frederico Fleury Curado.

According to him, up to now Embraer has won the largest part of orders for jets in this profile in the region, turned to regional aviation. Curado said that the sale to Saudi Arabian, a traditional company that is a reference in the Arab world, helped open doors and "approve" the Brazilian product in the Arab market. From there came orders from other heavyweight companies like EgyptAir and Royal Jordanian.

To service the customers in the region, Embraer already has employees living in Jeddah, Saudi Arabia, and in Amman, Jordan, to provide full-time technical service to clients. Soon the company will also have an employee living in Cairo too.

Curado added that the company develops work in the region that includes understanding the local culture and knowing the companies that operate there, to offer the ideal product. "Commercial aeroplanes are a tool, companies buy them to make money. That is why it is necessary to know the market to offer the ideal solution," he said. "And the Brazilian aeroplane is very flexible, capable of adapting and speaking the language of the customer," he said.

In this respect, the aircraft ordered by Arab companies are of different models, recommended for specific uses. To Saudi Arabia and Egypt, countries of large territorial dimensions, the model chosen was the Embraer 170, the smallest in the 170/190 family, for operation on domestic routes. The company from Jordan, a small country, ordered the Embraer 195, the largest aircraft made by the Brazilian company, and the idea is to use it on international flights. Curado added that the aircraft "did very well" operating in the conditions of the region, which include heat and desert sand.

Governments

Adaptability is also considered a differential in the area of governmental defence. The company's vice president for the defence and government market, Luiz Carlos Aguiar, believes in the possibility of the company closing contracts in the sector with the Arab countries in the near future. "We believe in the potential of the market and have been working on it for a long time," he said. "Our product is flexible and capable of integrating different systems," he added. This means that the aircraft may even be finished at the destination, using local equipment and labour.

To him, among the Arab countries with the greatest potential are Saudi Arabia, the United Arab Emirates and Egypt. In terms of products, the executive believes that in the first place, the market is more appropriate for aircraft for the transport of authorities, the government version of the executive and commercial jets made by Embraer; in second place comes the Super Tucano, a turboprop fighter for advanced training and light attack, and in third place come the aircraft for vigilance. Embraer promoted early this year a tour of Africa, Asia and the Middle East in the Super Tucano, including various Arab countries.

For next year, the company already has some commercial promotion actions forecasted for the region, like participation in the Middle East Business Aviation (Meba) conference, in Dubai, where Luís Carlos Affonso will give a talk, and in Dubai Air Show, a fair to take place in the second half.

Investment of US$ 2.6 billion

With the opening of new markets, expansion of the number of orders and the release of new models, Embraer intends to invest US$ 2.6 billion over the next five years, according to the company president, Maurício Botelho. The organization intends to hire another 3,000 professionals in 2007.

In the executive aviation area alone, three new models are going to start operating between 2008 and 2009, the small Phenom 100, Phenom 200 and Lineage. Affonso said, however, that other new models should be launched. "Our long term vision is to have a greater number of options," he said. According to him, the market has a capacity to absorb at least two intermediary models between the Phenom and the Legacy and another two between the Legacy and the Lineage.

The total number of deliveries, with commercial aviation answering to 70% of the business, should reach 135 units in 2006, between 160 and 165 in 2007 and between 195 and 205 in 2008, not counting on military aircraft. To Botelho, who is going to leave the command of the company in April, making way for Curado, the most relevant fact that took place in 2006 was the pulverization of the company's capital. "This was the most meaningful fact since the privatisation of the organization, (in 1995)," he said.

With the spreading out of the capital, the company no longer has a group controlling it, but is now part of the New Market at the São Paulo Stock Exchange (Bovespa). The organization also has shares sold on the New York Stock Exchange (NYSE). "Our growth no longer depends on anyone's desire, only on our capacity," added Botelho, who is going to stay at the company as the chairman of the board of administration.

*Translated by Mark Ament