Embraer

Embraer S.A. (Portuguese pronunciation: [ẽmbɾaˈɛɾ]) is a Brazilian aerospace conglomerate that produces commercial, military, executive and agricultural aircraft[6] and provides aeronautical services. It was founded in 1969 in São José dos Campos, São Paulo, where its headquarters are located. The company is the third largest producer of civil aircraft, after Boeing and Airbus.[7]

Embraer
Sociedade Anônima
Traded asB3: EMBR3
NYSE: ERJ
Ibovespa Component
ISINBREMBRACNOR4 
IndustryAerospace, defense
FoundedAugust 19, 1969 (1969-08-19)
FounderOzires Silva
Headquarters
São José dos Campos, São Paulo
,
Brazil
Area served
Worldwide
Key people
Francisco Gomes Neto(President & CEO)
Mauro Kern (Vice president)
Jackson Schneider (Vice president)
José Filippo (Vice president)[1][2]
ProductsBusiness, commercial, and military aircraft. Aircraft parts. Mission systems for air and ground operation
BrandsEMB, ERJ, Legacy, Lineage,
LR, Phenom
Revenue R$19.8 billion[3](2017)
R$2.74 billion[4] (2017)
Number of employees
19,116[5] (September 1, 2014)
DivisionsEmbraer Defense & Security
Embraer Commercial Aviation
Embraer Executive Jets
SubsidiariesNeiva, OGMA, Atech, Bradar, SAVIS
Websiteembraer.com

On 26 February 2019, Embraer and Boeing announced the acquisition of an 80% share of Embraer's commercial division, which would take the name Boeing Brasil – Commercial, and market the E-Jet and E-Jet E2 series of narrow-body short-to medium-range twin-engine jet airliners.[8] The deal was canceled in April 2020, following Boeing falling in financial trouble after being heavily affected by the reduction of demand caused by the COVID-19 pandemic and, to a lesser degree, the disasters involving flaws in the design of its 737 MAX airplanes.

History

Seeking to develop a domestic aircraft industry, the Brazilian government under Getúlio Vargas' Estado Novo made several investments in the aerospace industry during the 1940s and 1950s.[9] However, it was not until 1969, following the rise to power of a military junta in the 1964 Brazilian coup d'état, that Empresa Brasileira de Aeronáutica (Embraer) was created as a government-owned corporation.[10] Its first president, Ozires Silva, was a government appointee, and the company initially only produced a turboprop passenger aircraft, the Embraer EMB 110 Bandeirante.[11]

Early growth

The Brazilian government contributed to Embraer's early growth by providing production contracts.[12] The company sold solely to the domestic market until 1975.

While military aircraft made up the majority of Embraer's products during the 1970s and early 1980s, including the Embraer AT-26 Xavante and the Embraer EMB 312 Tucano,, it debuted a regional airliner, the Embraer EMB 120 Brasilia, in 1985.[13] Aimed at the export market, this plane was the first in a series of highly successful small and regional airliners.[14]

License-built Pipers

In 1974, the company started to produce Piper light airplanes under license.[15] Piper first put together knock-down kits in their US factory for Embraer to assemble and market in Brazil and Latin America. By 1978, most of the parts and components were being sourced locally.[15] Between 1974 and 2000, nearly 2,500 license-built Pipers were produced by Embraer.[15]

Acquisition of Aerotec

Aerotec was a design and manufacturing company founded in São José dos Campos in 1962 under the auspices of the Brazilian General Command for Aerospace Technology. Beginning in the late 1960s, the firm manufactured a two-seat trainer for the Brazilian Air Force, the Aerotec Uirapuru. A small number were also built for the civilian market, and others were exported to other Latin American countries.

By 1980, Aerotec's main business was producing components for Embraer. However, around this time, the Brazilian Air Force became interested in an upgraded version of the Uirapuru. A prototype, designated Uirapuru II, was built; but, by the time it flew, the Air Force no longer required it. A small number were built for export. In 1987, the firm was sold to Embraer.

Privatization

Born from a Brazilian government plan, and having been state-run from the beginning,[9] Embraer eventually started a privatisation process in 1992 alongside other state-run companies, such as Telebras and Vale. Privatisation was a key policy of the economically liberal PRN government of Itamar Franco, elected in the 1989 presidential election.[16] Embraer was sold to private investors on December 7, 1994,[10][17] which helped it avoid a looming bankruptcy.[9] The Brazilian government retained interest through possession of golden shares, which allow it veto power.[14] Embraer continued to win government contracts throughout the 2000s and 2010s.

Initial public offerings

In 2000, Embraer made simultaneous initial public offerings on the NYSE and BM&F Bovespa stock exchanges. As of 2008 its NYSE-traded shares were American depositary receipts representing 4 BM&F Bovespa shares and it was partially owned by the Bozano Group (11.10%), Previ (16.40%), Sistel (7.40%), Dassault Aviation (2.1%), EADS (2.1%), Thales (2.1%), Safran (1.1%), and the government of Brazil (0.3% and golden share), the remainder being publicly traded.[14]

As of December 31, 2014 the shareholders with more than 5% of the company's capital were:[18]

Product line expansion: military, regional and executive

In the mid-1990s, the company pursued a product line more focused on small commercial airplanes over the military aircraft that had previously made up the majority of its manufacturing.[9] It soon expanded to the production of larger regional airliners in 70–110 seat range, and smaller business jets.[14]

By May 2019, Embraer was considering developing a new family turboprop regional airliners in the 50-70 seat range, complementing the aging E-Jet E2, so as to free engineering resources.[19][20] By July 2020, it had evolved into the 70–100 passengers range[21]

Executive jets

At the 2000 Farnborough Airshow, Embraer launched the Legacy 600, a business jet variant of the Embraer Regional Jet. In 2002, a dedicated subsidiary, Embraer Executive Jets, was created, as the Legacy was introduced into service. In 2005, the Phenom 100 was first envisioned as an air taxi similar to the Eclipse 500, competing with Cessna and Hawker Beechcraft. It was introduced in 2008 and is the basis of the larger Phenom 300. The midsize Legacy 450 and Legacy 500 were jointly developed as clean sheet designs, while the Lineage 1000 is a VIP version of the E190. In 2016, Embraer delivered its 1,000th executive jet and had a market share of 17% by volume, though it lacked an ultra-long-range large cabin jet.[22] In October 2018 Embraer announced two new business jets—the Praetor 500 in the midsize cabin category—and the Praetor 600 in the super midsize category.[23]

Military transport

On April 19, 2007, Embraer announced it was considering the production of a twin-jet military transport. Work began in May 2009 with funding from the Brazilian Air Force.[24] Correios, the Brazilian postal service, has shown interest in buying this aircraft.[25][26] Using much of the technology developed for the Embraer 190, the C-390 would carry up to 23 tons of cargo[27] and aims to replace Cold War-era cargo aircraft.[28]

While firm orders for the yet-to-be-produced KC-390 transport had not yet been made in the fall of 2010,[24] Argentina asked for six examples and several other South American nations also expressed interest.[29][30]

Government subsidy controversy
Main article: Bombardier Aerospace and Embraer S.A. government subsidy controversy

Brazil and Canada engaged in an international, adjudicated trade dispute over government subsidies to domestic plane-makers in the late 1990s and early 2000s. The World Trade Organization determined that both countries had provided illegal subsidies to what were supposed to be privately owned industries. Brazil ran an illegal subsidy program, Proex, benefiting its national aviation industry from at least 1999–2000, and Canada illegally subsidized its indigenous regional airliner industry, comprising Bombardier Aerospace.

Boeing-Embraer joint venture

On July 5, 2018, a joint venture with Boeing was announced that would see Boeing owning 80% of Embraer's commercial aviation division.[31] This was seen as a reaction to Airbus' acquisition of a majority in the competing Bombardier CSeries on October 16, 2017.[32] Under the 2018 plan, Embraer would retain its executive business jet and its defence business.[33]

On May 23, 2019, Boeing announced that the resulting division would be known as Boeing Brasil – Commercial, dropping the Embraer name, but had not yet decided whether the aircraft would be rebranded as Boeing models.[34] On November 18, 2019, Boeing (49%) and Embraer (51%) announced a joint venture to promote and develop new markets for the C-390 Millennium tactical transport aircraft, named Boeing Embraer – Defense, to operate after the regulatory approvals and closing conditions.[35]

In April 2020, Boeing canceled its acquisition of Embraer's commercial operations after being heavily affected financially by the air crisis initiated by the COVID-19 pandemic and by the 737 Max groundings.[36][37][38]

Production bases and facilities

The company's headquarters and main production base are in São José dos Campos, São Paulo, Brazil. It also has production bases in the State of São Paulo at Botucatu, Eugênio de Melo (a district of São José dos Campos) and Gavião Peixoto. The company has offices in Beijing, Fort Lauderdale, Florida, Amsterdam, Singapore, and Washington, D.C..[39]

Non-Brazilian main facilities

Subsidiaries
  • EAMS – Embraer Aircraft Maintenance Services Inc. (Nashville, TN, U.S.) – maintenance services site.
  • OGMA – Indústria Aeronáutica de Portugal (Alverca do Ribatejo, Portugal) – aircraft component maintenance, repair and manufacturing, plus aircraft maintenance services.
  • Embraer Aircraft Holding, Inc. – Its U.S. headquarters are in Fort Lauderdale, Florida, in a facility founded in 1979. Its external relations office is in Washington, D.C..[41]
  • Embraer Aero Seating Technologies – Inaugurated in September 2016 in the city of Titusville, Florida, Embraer Aero Seating Technologies produces aircraft seats.[42]
  • Mesa Unit (Located in Mesa, Arizona, U.S.) – Implemented in 2008, performs maintenance, repair and overhaul services on the Phenom and Legacy executive aircraft line.[43]
  • Windsor Locks Unit (Located in Windsor Locks, Connecticut, U.S.) – Implemented in 2008, as well as the Mesa Unit, also performs maintenance, repair and revision services in Embraer's executive line.
  • Melbourne Unit (Located in Melbourne, Florida, U.S.) – Implemented in 2011, it is the first unit in the United States to carry out the final assembly of aircraft. It produces the line of executives Phenom 100 and Phenom 300. In November 2012 work began on an Engineering and Technology Center at the Melbourne facility.
  • ECC Leasing – Embraer's in-house leasing division, based in Dublin, Ireland, managing and re-marketing the Embraer aircraft portfolio owned directly by the manufacturer.[44]

Joint ventures
  • Harbin Embraer (Harbin, China) – manufactures aircraft from the ERJ family for the Chinese market.[45]
  • Embraer's commercial airliner portfolio, as well as the KC-390, would be part of two separate joint ventures with Boeing. In the case of the civil aircraft line, Boeing would own 80% of the resulting firm.[46]

Aircraft models

Commercial

By December 2018, Embraer claimed to lead the sub 150 seat jetliner market with 100 operators of the ERJ and E-Jet families.[47]

  • Embraer E-Jet family
    • Embraer E170 (66–78 passengers)
    • Embraer E175 (76–88 passengers)
    • Embraer E190 (96–114 passengers)
    • Embraer E195 (100–124 passengers)
  • Embraer E-Jet E2 family
    • Embraer E175-E2 (80–90 passengers)
    • Embraer E190-E2 (97–114 passengers)
    • Embraer E195-E2 (120–146 passengers)[48]

Military

Former

Current

Business Jets
Bestseller Embraer Phenom 300

Former

Current

Utility

Current
  • Embraer Ipanema (cropduster)

Former

Piper Localizations

Current

Former

Commercial aircraft deliveries
Year 1996 1997 1998 1999
Deliveries 4 32 60 96
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Deliveries 160 161 131 101 148 141 130 169 204 244
Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Deliveries 246[50] 204[51] 205[52] 209 208[53] 221[54] 225[55] 210[56] 181[57]

The numbers include military versions of commercial aircraft.

Total delivered-backlog-options as of June 30, 2007: 862-53-131 145 Family, 256-399-719 170/190 Family

Net deliveries (by year)
As of 24 April 2019
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  2. "Botelho resigns as chairman of Embraer". Flightglobal. Retrieved 15 January 2012.
  3. "2015 Results". Embraer. Retrieved 2016-09-09.
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  9. Territorial Reviews, Madrid, ES: OECD, 2007, pp. 156–57, 264, ISBN 978-92-64-03848-6
  10. "Timeline", Historical Center (official site), BR: Embraer.
  11. "Ozires Silva" (in Portuguese). Época Negócios. 28 January 2014. Retrieved 24 October 2014.
  12. "History", Historical Center (official site), BR: Embraer.
  13. The Embraer EMB120 Brasilia, Air liners.
  14. Monks, Robert AG; Minow, Nell (2008), Corporate Governance, John Wiley & Sons, pp. 356–59
  15. "EMB 710 Carioca", Aircraft History, BR: Embraer History Center.
  16. Eckhouse, John (January 12, 1991), "Brazil on Road Peddling State-Owned Enterprises", The San Francisco Chronicle (final ed.), San Francisco, CA, US, p. B.1.
  17. Anuatti-Neto, Francisco; Barossi-Filho, Milton; Carvalho, Antonio Gledson de; MacEdo, Roberto (2005), "Os efeitos da privatização sobre o desempenho econômico e financeiro das empresas privatizadas" [The effects of privatisation on the economical & financial performance of the privatised companies], Scielo (in Portuguese), BR, 59 (2), pp. 151–75, doi:10.1590/S0034-71402005000200001.
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  30. "Defense Watch", Defense Daily, Potomac, 247 (47), September 7, 2010.
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  32. "Boeing Is in Talks for Combination With Regional-Jet Maker Embraer". Bloomberg. 21 December 2017.
  33. Hemmerdinger, Jon (11 Oct 2018). "Embraer-Boeing agreement lays out terms of proposed joint venture". Flightglobal.
  34. Rochabrun, Marcelo (May 23, 2019). "Boeing drops Embraer name from Brazil commercial jet division". Reuters.
  35. "Boeing Embraer – Defense Joint Venture to Develop New Markets for the C-390 Millennium" (Press release). Boeing. Nov 18, 2019.
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  54. EMBRAER RELEASES FOURTH QUARTER AND FISCAL YEAR 2015 RESULTS AND 2016 OUTLOOK.
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Further reading
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