SAO PAULO — After months of deliberation, Boeing released a new title for Embraer’s commercial aviation division. The name, Boeing Brasil – Commercial, represents a growing trend of consolidation within the commercial aviation industry.
In July 2018, both manufacturers came through with a much-expected collaboration by signing a Memorandum of Understanding (MoU) that would combine efforts to catch up to lost ground against its competitors.
Boeing and Embraer entered into a joint venture that would see the commercial aircraft and services business of Embraer, aligning with Boeing’s commercial development, production, marketing and lifecycle services operations.
The approved joint venture is made up of the commercial aircraft and services operations of Embraer. Boeing will take an 80% ownership stake in the wing with Embraer holding the remaining 20%.
While the deal has already been approved by Embraer shareholders, the Brazilian government has yet to authorize the agreement after receiving pressure from local labor unions.
Aside from including “Brasil” in the new title, the Embraer brand has been effectively removed from the segment name. As of now, Boeing has not announced if it plans to rebrand Embraer’s commercial models, such as the E190 E2.
Many see Boeing’s 80% stake in Embraer’s commercial division as a countermeasure to Airbus’s majority takeover of Bombardier’s CSeries program last year. The Canadian planemaker was the fourth largest civil aircraft manufacturer in the world and is a direct competitor to Embraer in the sub-150 seat market.
After signing its deal with Bombardier, Airbus rebranded the Canadian-made CSeries as the A220, in an effort to bring the model series in line with Airbus’s brand and product lineup. Some see the possibility of Boeing taking similar measures with the Embraer E-Jets.
However, such a drastic change may receive backlash from Embraer loyalists who are already having a hard time with the new rebranding.
In addition, Boeing has no more room in its 7X7 roster, which would demand a new marketing effort to add Embraer’s commercial portfolio.
The Embraer Legacy
Embraer was founded as Empresa Brasileira Aeronáutica in 1969 by the Brazilian government and was a state-run company until its privatization in 1994. The Embraer brand has always been symbolic of Brazilian manufacturing and a source of pride for the country and its citizens.
Any further diversion from the Embraer label is likely to be met with resistance from the Brazilian corporation, which still remains a separate entity offering defense and executive products and services. The commercial segment will maintain its headquarters in São Jose dos Campos, Brazil.
Embraer still remains as the third largest aviation manufacturer globally, ahead of its direct competitor, Bombardier, and behind giants Airbus and Boeing.
However, with Bombardier divesting from its Q400 and CSeries programs, Embraer’s positioning in the market is likely to grow in the coming months.
The Brazilian company also maintains stable operations in the defense sector, as it looks to introduce its new KC-390 medium transport model and was recently contracted to jointly build four new warships for the Brazilian Navy.
Some signs have pointed to increased collaboration on other projects, including the KC-390.
As both Airbus and Boeing look to further cement their positions in the world’s commercial duopoly, many wonder how much further they will go to gain an edge and diversify their offerings.
Embraer CEO: “We Need Access To Boeing’s Customers”
The name-change news came aptly before Airways was scheduled to attend Embraer’s Media Day in São José dos Campos in preparation for this year’s upcoming Paris Air Show (PAS).
This afforded an opportunity to further question Embraer’s management about the renaming and the implications it has on Embraer’s future as a brand.
The visit to the manufacturer’s headquarters began in the Embraer Historical Center with a presentation of the company’s commercial aviation strategy delivered by Rodrigo Silva e Souza, from Embraer Market Intelligence.
After the presentation, John Slattery, CEO of Embraer Commercial Aviation, joined via a video conference for a Q&A session.
Slattery shed light on particular aspects of the joint venture with Boeing, that he claimed would be “closing by year-end.” He believes these would most benefit Embraer in the future.
More specifically, the divisional CEO cited Boeing’s extensive customer network as an opportunity for the Brazilian company to expand its audience. Slattery noted that the joint venture showed “how we optimize synergies… ensuring access to Boeing’s 400 operators worldwide.”
John Slattery reinforced, saying that Embraer “need[s] to get access to [Boeing’s] customers.” Nevertheless, he was adamant that “no actions will take place in advance of closing.”
The commercial aviation chief went a step further, commenting on the market landscape and Embraer’s position relative to the Airbus A220.
“I believe the airlines are waiting to see the closing [of the Boeing joint venture] crystalize and materialize… that has probably meant that there has been somewhat of a drag on the A220 sales,” he commented.
Slattery remarked that airlines are likely holding off on any drastic fleet changes until they can see all that is available within the sub-150 seat market. He exemplified further optimism regarding the deal with Boeing.
“My vision is that Boeing Brasil – Commercial will add significant value on the engineering front to Boeing… It is certainly something that we want to see done in addition to our continued focus on end-to-end development of new aircraft and new programs.”
John Slattery also commented on the fate of the E1, stating that “the future is bright.”
The CEO emphasized that, while production of the E2 will take the main focus in the coming years, Embraer “will continue to produce that aircraft in full support from [its] supply chain,” given customer demand for the model remains.
Slattery was unable to join the session in person because he had just landed in Asia for business—a testament to the company’s desire to grow further in the region. “Penetration into Southeast Asia isn’t what [Embraer] would like it to be,” Slattery confessed.
Growth In Asia, Africa Are Key
Both Slattery and Souza emphasized Embraer’s ambitions to establish a greater presence in the African and Southeast Asian markets. Slattery highlighted the E-Jets’ success in the Chinese market.
Nevertheless, when inquired about whether or not Comac’s rise in China would be a threat to Embraer’s business, Slattery asserted that “Absolutely it will be, same can be said for MRJ in Japan, and the same can be said for Sukhoi in Russia.”
“We are seeing a lot of state sponsorship of OEMs [original equipment manufacturer] of course as they want to develop those businesses in their own sovereign areas and that is meaningfully impacting the competitive landscape,” he said.
Nevertheless, the CEO reassured that Embraer was able to maintain its competitive advantage in the region through larger models, hot-and-high performance, and 100+ jets already flying in China.
These features of Embraer’s lineup allow the Brazilian manufacturer to preserve its “reputation of being a top tier OEM for the airlines [in China].”
In addition, Slattery showed his commitment to growing Embraer’s presence in China by traveling to the country at least once a quarter in order to support company management in Beijing and meet with customers in the area.
Future Boeing-Embraer Branding Strategies
Many were curious about how the recent deal with Boeing would impact strategy and “brand equity”, a phrase that Slattery was keen to emphasize as a strong point for Embraer.
“We have 75 customers in 50 countries and over 1,500 aircraft flying around the world today that are named E-Jets. The E-Jet has brand equity,” he declared.
Asked about whether or not he expected a name switch for the E-Jet models similar to the rebranding of Bombardier’s CSeries, Slattery responded that “we did quite an extensive process to figure out the name Boeing Brasil.”
“We’re now just going to start that process and figure out the various stakeholders that are involved and that will be influenced by or could influence the name of the E2 as we go forward or should we change the name E2 going forward,” he explained.
Embraer was also excited to give a sneak peek of its newest Profit Hunter livery on the E195 E2, adding a fourth aircraft to the Profit Hunter family. The Brazilian planemaker has a tradition of selecting predators to be painted on the noses of its E-Jet models, having unveiled eagle, tiger, and shark variants right before the yearly airshow.
This year, Embraer decided to combine predator and machine: a lion with a mane resembling that of a computer motherboard. The new Profit Hunter is Embraer’s largest yet and will be unveiled to the greater public at PAS.
Quick Look At The E-Jets Assembly Line
Touring the Commercial Aviation factories of the São José dos Campos campus, one manufacturing element stood out among the rest: the hybrid assembly line. This piece of technology allows for the same tools and assembly lines to be used for producing both the E1 and E2 models.
In addition to its hybrid assembly line, Embraer boasts that 75% of all drilling is done robotically. However, drilling is not the only part of the manufacturing process that has been automated.
The painting process has largely been mechanized, saving about 8 kilograms of paint per aircraft. This creates a faster, cheaper, lighter, and more environmentally aircraft for Embraer’s customers.
Embraer has also been spearheading a paperless, 3D environment, using iPads which offer 3D visuals throughout the assembly process.
All of these efforts have led to increased production without the need to expand current infrastructure, an achievement that Embraer is especially proud of.
The commercial aviation showcase concluded with a flight to Embraer’s GPX facility on a new E175 E1 that will soon be delivered to Alaska Airlines.