The world’s great recession has hit hard the aviation sector. As a result, Brazil’s airplane builder, Embraer, laid off 4,200 employees in February 2009.
The company got some good news this week at the Farnborough Air Show in England where an English airline, Flybe, ordered 35 of Embraer’s regional jets, worth US$ 1.3 billion.
Embraer says it now has orders for the delivery of US$ 15.2 billion worth of aircraft in the future. However, the company reports that its actual earnings this year will at best be equal to last year – around 10.8 billion reais (slightly more than US$ 6 billion).
Production remains at the 2008 level and although it has contracts for future delivery, Embraer does not have many new contracts, explain company spokespersons.
Meanwhile, labor unions, still smarting from the firings in 2008 complain that the company should rehire workers. In the past Embraer was a state-run enterprise where no one ever lost his job.
The unions claim that Embraer is overworking its employees, saddling them with so many extra hours they are having health problems. Embraer denies the charges and says it does not intend to hire new workers.
Embraer and Air Lease Corp., a newly formed aircraft leasing, purchasing and financing provider company led by the legendary Steven Udvar-Hazy, signed a Letter of Intent (LOI) for the sale of 15 Embraer 190 jets, at the 47th Farnborough International Airshow, in England. Five of the 15 orders are re-confirmable, and the deal also includes five options, representing a potential sale of 20 Embraer 190s.
The Embraer 190 is the third of the four members of the Embraer 170/190 family of E-Jets, a brand-new commercial aircraft that entered service in August 2005. The jet may be configured in one or two classes, seating 98 to 114 passengers in a comfortable four-abreast (2-2), no-middle-seat configuration, and can fly up to 2,400 nautical miles (4,448 kilometers) nonstop.
Air Lease Corp. was established in 2010 in Los Angeles, California. The company’s staff is comprised of pioneers of the aviation industry who continue to cultivate over 30 years of trusted customer relationships.
At the same British Air Show, Embraer and Flybe, one of Europe’s leading low-cost and regional airlines, signed a contract for the sale of 35 Embraer 175 jets.
The deal includes 65 options and 40 purchase rights, giving the order a potential for 140 Embraer 175s. The total value of the contract, at list price, is US$ 1.3 billion, based on January 2010 economic conditions, and could reach US$ 5.0 billion, if all options and purchase rights are exercised.
The British airline’s Embraer 175 jets will be configured in a single-class layout, seating up to 88 passengers with comfortable, 30-inch pitch (76 cm) Elite seats. The first aircraft is scheduled for delivery in the second half of 2011.
TRIP Linhas Aéreas
Embraer and TRIP Linhas Aéreas have also announced the closing of a contract for the sale of two Embraer 190 jets. The aircraft will be configured with 106 seats, and the value of the deal, at list price, is US$ 80 million, based on January 2010 economic conditions.
TRIP currently operates six Embraer 175 jets with a classic, single-class configuration of 86 seats. Five of the airplanes come from the contract signed with Embraer in June 2008 that also included options for another ten aircraft (two of which were now confirmed), and purchase rights for another 15.
The other jet is used through a leasing contract with ECC Leasing, an Embraer wholly owned subsidiary.
The Brazilian airline should receive its first Embraer 190 airplane during the second quarter of 2011, thus increasing the carrying capacity of its Embraer 175s, which is now the biggest airplane in the company’s fleet.
Azul Takes Five
Embraer has signed an additional contract with Azul Linhas Aéreas Brasileiras for the sale of five more Embraer 195 jets. The total value of the deal, at list price, is US$ 211 million, under January 2010 economic conditions.
This order is already included in Embraer’s firm order backlog for the second quarter of 2010 as “Undisclosed customer”. The five Embraer 195 jets will be delivered yet this year, and by December, Azul will have 26 E-Jets in its exclusively Embraer fleet.
After adding in the 36 aircraft ordered in March 2008 (five Embraer 190s and 31 Embraer 195s), Azul now has a total of 41 firm orders for Embraer jets, as well as options for another 20 aircraft and purchase rights for 20 more.
Azul took delivery of its first Embraer aircraft in December 2008. It began operations a few days later, out of Viracopos Airport (VCP), in the city of Campinas, outstate São Paulo, to Porto Alegre and Salvador. The airline currently serves 21 cities in Brazil and continues to expand the number of destinations.
It has carried more than three million passengers in about a year and a half of operation. Investments also include the acquisition of a flight simulator that is already in use to train the company’s pilots.
The new Embraer 195 jets for Azul will be configured identically to those that were previously ordered, with accommodation for 118 passengers in a single class.
They will have the latest entertainment system, with individual monitors, by which each passenger may select the programming of their preference.
With an autonomy of 2,300 nautical miles (4,260 kilometers), the jet is able to fly nonstop on any route between Brazilian capital cities.