Embraer sees demand for 10,550 new 150-seat jets in next 20 years
Brazil’s Embraer, the leading manufacturer of commercial aircraft with up to 150 seats, on July 15, 2018, released its Market Outlook 2018-2037, the company’s annual report of the trends and economic projections for the next 20 years. According to the report, the plane maker foresees demand for 10,550 new aircraft with a capacity of up to 150 seats over the next 20 years, worth $600 billion. The company also states industry profits are eroding amid a rise in costs which is expected to continue.
In a statement from the Farnborough International Airshow 2018, Embraer said that the in-service fleet of aircraft of that size is expected to increase to 16,000 aircraft, compared to the 9,000 currently in operation. Market growth will drive 65% of this demand, while the remaining 35% will replace ageing aircraft, the Brazilian plane maker stated.
According to Embraer’s Market Outlook 2018-2037, although region-specific outlooks vary considerably, efficiency and sustainability remain the underlying drivers of the projected market demand. The plane maker maintains that the up to 150-seat segment will form an ever more integral part of the global air transport eco system.
Up to 150-Seat Segment – Deliveries by Region (Source: Embraer)
Region Deliveries Share
Asia-Pacific 3,000 28%
North America 2,780 27%
Europe 2,240 21%
Latin America 1,140 11%
CIS* 580 6%
Africa 450 4%
Middle East 360 3%
World (2018-2037) 10,550 100%
* The Commonwealth of Independent States
Embraer states that the economic performance of the airline industry will mostly depend on how far costs will rise and to what extent the industry can sustain a healthy revenue environment. The Brazilian manufacturer believes that aircraft in the up to 150-seat segment are the best placed to combine cost efficiency with stronger yields.
However, “Past performance is no guarantee of future results,” said John Slattery, President & CEO of Embraer Commercial Aviation. “Even though every facet of the industry has excelled over the past years, we are now warming up for the next period of higher costs, with pressures on yields likely to continue unabated. Profits are eroding and gains wiped out with rising costs.”
The segment’s new product lineup challenges the "paradigm" that smaller aircraft necessarily have higher CASK, and now approach the seat cost economics of larger narrow-body aircraft with roughly 20% trip cost advantage.
According to the company, aircraft in the up to 150-seat segment is one of the main pillars of business sustainability. Embraer aims to consolidate its position as the market leader in the segment and maximize profitability for both airlines and leasing companies with its single-aisle family of aircraft, the E-Jets E2.
Earlier this month, on July 5, 2018, Boeing announced it struck a tentative deal for a controlling stake in the commercial aircraft arm of Embraer, under a new $4.75 billion joint venture.
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