Embraer has announced that is currently engaging in talks to sell its increasingly popular E2 regional jet to South American carriers LATAM Airlines Group SA (LATAM) and Gol Linhas Aereas Inteligentes SA (Gol). Any order received from the carriers for new E2 aircraft would help improve connectivity between Brazilian cities, said Chief Executive Officer Francisco Gomes Neto.
The announcement comes at a crucial time for the South American airline market. While demand continues to increase exponentially for air travel, airlines are being constrained from growing to meet this surge in demand by the lack of suitable aircraft both in the short term as well as in the coming years as order backlogs for Airbus and Boeing aircraft continue to lengthen.
Embraer’s family of E2 regional jets fills the gap between smaller turboprop aircraft and bigger aircraft such as the Airbus A320 family and the Boeing 737 MAX family for carriers that want to increase capacity amid supply constraints on larger narrowbodied planes.
“This is a moment where there is interest and more focus on this segment,” Neto said. “Narrow bodies have a full order book until the end of the decade, so there is a great opportunity for Embraer to grow.”
Purchasing an aircraft from Embraer now could see the customer receiving that aircraft in 2025, said Neto. Compare that to Boeing, where new orders for Boeing 737 MAX aircraft are likely to be delivered in 2029.
That said, aircraft manufacturing as a whole has been subjected to supply constraints and delivery delays since the pandemic, and Embraer has not been exempted from this. The company will continue to see delays in its deliveries through 2024 and does not expect a complete normalization of the supply chain until 2026, Neto said.
The announcement regarding the talks with LATAM and Gol comes as Embraer rides a wave of prosperity and good news. Shares in the São José dos Campos-based company have risen more than 60% so far in 2024. The planemaker is also looking to almost double annual revenues to $10 billion by 2030, according to Neto.
Meanwhile, recent reports published in The Wall Street Journal and other publications in May 2024 that Embraer was exploring options for a larger narrowbody aircraft to compete with its rivals have been downplayed by Neto, adding that Embraer had no such plans in place at this time.
“Our teams are always studying alternatives for the future,” said Neto, speaking at the company’s annual media day held at its Brazilian headquarters on June 18, 2024. “Our strategic plans until 2030 were made based on our current products, and at this moment there is no concrete plan to develop any aircraft in this segment.”
For now, the company is focused on boosting sales and becoming cash-positive in 2025, Neto added.
“The company has been much more efficient in recent years, delivering better results each year, and I think the market has recognized that,” he said. “Our shares were very cheap. Now they’re just cheap. So, we do have a great opportunity to grow,” he concluded.