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Embraer, the Brazilian aerospace and defence group, is studying options for a new passenger aircraft that could put it in direct competition with the industry’s heavyweights, Airbus and Boeing.
The project, which is in its early stages, could either become plans for a narrow-body aircraft or a long-range business jet, people familiar with the situation confirmed.
The business case for the initiative should be ready by the end of next year, when it will then be taken to the board of directors, these people said. The Wall Street Journal first reported that Embraer was looking at the possibility of a narrow-body aircraft.
The world’s third-largest civil aircraft manufacturer is the leading producer of regional jets, which typically have up to 120 seats and are smaller than the narrow-body planes that Boeing and Airbus make. Its latest and largest model, the E195-E2, can carry up to 146 passengers.
In executive jets, Embraer sells entry-level, light, midsized and super midsized aircraft. The long-range segment is dominated by Gulfstream, Bombardier and Dassault Aviation.
Any decision to enter the single-aisle market would see Embraer compete directly with Airbus’s best-selling A320 family of jets and Boeing’s 737 Max aircraft. It would be a decision fraught with risk; launching a model costs tens of billions of dollars and success is not guaranteed.
Embraer has in the past regularly played down any interest in entering the competitive market for single-aisle aircraft. Attention over the possibility has intensified, however, amid the turmoil at Boeing after the mid-air blowout of a section of one of its 737 Max aircraft in January.
The US plane maker has since been forced to slow production of the Max as it focuses on improving its manufacturing and quality processes. It burnt through almost $4bn in cash in the first three months of this year and is revamping its top management. The crisis has frustrated Boeing’s airline customers, many of which have had to trim their busy summer flying schedules.
Embraer said that while it “certainly has the capability to develop a new narrow-body aircraft”, the company has a “young and very successful portfolio of products developed in recent years, and we are really focused on selling those products”.
It added: “We don’t have any plan for a sizeable cycle of capex at this time.”
Embraer, which has previously said it was interested in partnerships to open new markets for its current products, is separately talking to several countries. It will consider local production, depending on the volumes of aircraft acquired.
The company has emerged strongly from the Covid-19 pandemic, returning to a profit of $164mn in 2023 as it ramped up deliveries of new aircraft. Its order backlog is at the highest level in seven years, according to Citi analysts.
Shares in the São Paulo-listed group have risen by more than half in 2024, giving Embraer a market capitalisation of $4.8bn on Wednesday.
Taking on Boeing head-on would be a remarkable turn of events for Embraer, which is considered the crown jewel of Brazilian engineering.
It is waiting for a decision from an arbitration it filed at the International Chamber of Commerce after Boeing abandoned a deal to take a majority stake in its civil aerospace division in 2020.
Industry analysts, however, believe that Embraer will be cautious about taking on the two giants of aviation.
Bombardier, Canada’s former industrial champion, was almost bankrupted attempting to do just that with its C series, a small, single-aisle offering. Bombardier ended up partnering with Airbus on the model in 2017 before selling out to the European giant and quitting the commercial sector in 2020 to focus on private jets.
Embraer also operates a defence division that supplies military equipment, such as light attack planes and transport aircraft.
