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Embraer, Airbus compete for KLM Cityhopper fleet

Competition involves order for 25 aircraft from KLM’s regional aviation subsidiary; Embraer currently holds exclusivity in the fleet

 

 

Embraer’s E2 jet is once again in the final stages of a competition with Airbus and its A220 model. This time, the contest is to secure an order for 25 aircraft from KLM Cityhopper, the regional aviation subsidiary of KLM. Maarten Koopmans, managing director of KLM Cityhopper, told Valor that negotiations are ongoing, and a decision is expected by the end of this year. The company’s goal is to replace part of its fleet of E1 (previous generation) aircraft from the Brazilian plane maker.

Currently, all of the airline’s aircraft are from Embraer—a total of 61 jets comprised of 25 E195-E2s, 19 Embraer 190s, and 17 Embraer 175s. Depending on the outcome of the competition, Embraer could lose its exclusivity with an important regional partner.

Koopmans explained that in 2019, KLM Cityhopper placed an order for 25 E2-195 aircraft, with an option to order an additional 25 units. By the end of 2025, the last aircraft from the firm order was delivered. Now, the airline is exploring other opportunities while negotiating the terms to decide on the additional jets with Embraer.

“We are in the process of reviewing our options. The work needs to be completed this year,” he said, emphasizing that the new aircraft will be used to replace part of the E1 fleet, particularly the E190.

Embraer and Airbus are currently engaged in a fierce global competition in the segment of aircraft with up to 130 seats. In December, the French company took the lead by securing a contract with Argentine low-cost airline Flybondi for a firm purchase of 15 A220-300s and 5 purchase options.

On the other hand, Embraer secured a significant order for up to 74 E2 aircraft from Latam. Of the total, 24 are firm, with a list price value of $2.1 billion. This acquisition was a victory for the Brazilian company, which has been seeking to expand its operational fleet in the country for years—currently, only Azul operates its commercial aircraft in Brazil.

KLM Cityhopper was founded in 1991, but its relationship with Embraer began only in 2008. That year, the airline received its first jet from the Brazilian plane maker. Until then, the entire fleet consisted of aircraft from Fokker, an important Dutch manufacturer back then. Fokker went bankrupt in 1996, and Cityhopper had to seek a new partner. The last Fokker aircraft left its fleet in October 2017.

Koopmans highlighted that regional aviation plays a central role in Europe and for KLM’s business. “If you look at KLM, we connect Europe. It’s the concept of connecting smaller planes with larger ones,” he said. Cityhopper operates 400 daily flights and is the largest in the segment in the region.

According to data from the European Regions Airline Association (ERA), the segment is responsible for transporting about 52 million passengers per year, which represents almost half the passenger volume that Brazil handles annually. Koopmans is vice president of the ERA.

Despite the optimism, the executive stated that the oil crisis poses various challenges. The main risk, he pointed out, is the reduction of routes and frequencies in less profitable markets. “The situation is complicated for the industry. We have been able to hedge fuel for the coming months,” he said.

The company made some minor changes to its flight schedule in Europe for May. These changes resulted in 80 fewer round-trip flights starting April 27. However, the cut represents less than 1% of the flights scheduled for the period.

Embraer and Airbus did not immediately reply to Valor’s requests for comment.

*By Cristian Favaro — São Paulo

Source: Valor International

https://valorinternational.globo.com/

 

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Embraer secures its largest executive jet sale

Shares traded the highest volume on B3 stock exchange, surpassing Itaú, Vale

02/06/2025

Embraer announced to the market on Wednesday (5) that it has signed an agreement with Flexjet—a U.S.-based company focused on leasing and sharing private aircraft—to sell 182 executive jets, along with 30 options. The deal is valued at $7 billion.

The agreement was well-received by the market, causing the Brazilian plane maker shares to soar by 15.51% at the close, reaching R$66.37 and marking the highest increase on the benchmark stock index Ibovespa.

Reflecting the news, the financial volume traded in Embraer shares was the largest on the trading floor, totaling R$1.377 billion, surpassing stock market giants Itaú (with R$1.246 billion), Vale (R$1 billion), and Petrobras (R$621 million), according to data from Valor Pro, Valor’s real-time information service.

According to Embraer, the agreement includes a fleet comprising the Praetor 600, Praetor 500, and Phenom 300E models, plus a services and support package. This is the largest order by Flexjet in its 30-year history and also the largest firm order for the Brazilian manufacturer’s executive jets.

“We are very happy with Flexjet’s renewed commitment to Embraer through this comprehensive purchase agreement, which further strengthens our over 20-year strategic partnership,” said Michael Amalfitano, president and CEO of Embraer Executive Jets, in a statement.

The partnership between Embraer and Flexjet began in 2003 when Flight Options, which became part of the Flexjet group in 2015, was the first shared ownership company to introduce the Brazilian Legacy Executive jet into its fleet.

The deal marks another strong bet from a major group in the Brazilian company. In March 2024, Embraer once again surprised the market by announcing an order of 133 E175 jets (including firm orders and purchase rights) by American Airlines. That agreement also exceeded $7 billion, considering the list price.

American Airlines, one of the largest airlines in the world, has become an important name in the global market betting on Embraer’s aircraft. On the commercial side, the Brazilian company has benefited from a post-pandemic trend of airlines seeking smaller planes, which are easier to fill.

The Embraer E1 has been successful in the United States, given access to the regional market. A union agreement limits the weight of jets in regional operation to 39 tonnes, which is why the E2, as it is a larger model, does not occupy that space.

Embraer ended 2024 with 73 aircraft delivered by its commercial division, a 14% increase year-over-year. In the executive segment, deliveries totaled 130, a 13% increase on the same basis.

The company still has an opportunity to grow its commercial division, which has been operating below the 100 annual deliveries mark for several years due to a weak supply chain. The company has indicated to the market that by 2026, depending on its suppliers’ capabilities, it expects to return to that level.

Despite the challenges, the Brazilian manufacturer has fared better compared to giants Boeing and Airbus, which operate larger aircraft and whose technology has posed complex challenges, particularly with more frequent engine maintenance on newer models.

Due to these maintenances, the industry has struggled with a shortage of engines, causing aircraft to be grounded worldwide. Embraer, by operating smaller jets with less drag (the more drag, the higher the fuel consumption, and the more force the engine must exert), requires maintenance at a greater interval.

In a report, the Itaú BBA team said Embraer’s announcement confirms that its executive aviation unit is among the company’s main growth drivers this year. According to analysts Daniel Gasparete, Gabriel Rezende, and Pedro Tineo, the order validates the Brazilian company’s strong operational moment, practically doubling its order book. The bank calculates that the order will sustain the company’s EBITDA growth by at least 10% per year until 2028, creating the potential for an upside in stock return estimates.

The Citi team noted that the announcement means a significant bet in the company regarding the quality of its products and the safety of its operations. Analysts Stephen Trent, Filipe Nielsen, and André Mazini wrote that even if the order has some discount due to its large volume, it considerably expands Embraer’s order book.

The XP team wrote that the deal confirms long-term delivery prospects following the current capacity expansion. Analysts Lucas Laghi, Fernanda Urbano, and Guilherme Nippes added that the addition of $7 billion to the order book ensures revenue visibility for the next five years.

“While we maintain our estimates unchanged, we believe that this order not only ensures longer revenue visibility but also reduces the delivery growth risk in the coming years,” XP pointed out.

  • By Cristian Favaro, Bruna Furlani e Felipe Laurence — São Paulo
  • Source: Valor International
  • https://valorinternational.globo.com/
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Embraer strategizes for U.S. market growth

Company sees expansion potential in commercial, business, and military aircraft

06/20/2024

Brazilian plane maker is exploring mergers or acquisitions to gain a foothold in the defense sector with the military C-390 aircraft — Foto: Divulgação

Brazilian plane maker is exploring mergers or acquisitions to gain a foothold in the defense sector with the military C-390 aircraft — Foto: Divulgação

Embraer is ramping up efforts to expand its presence in the United States. The plane maker’s strategies include increasing sales of commercial jets like the E-175 and business jets like the Praetor 500 and exploring mergers or acquisitions (M&A) to gain a foothold in the defense sector with the military C-390 aircraft. These plans were outlined during Embraer Day in São José dos Campos on Tuesday (18) and Wednesday (19).

The United States leads the aviation sector, with the largest airlines and business jet operators globally. North America accounted for 62% of Embraer’s revenue in the first quarter of this year.

Rodrigo Silva e Souza, the chief marketing officer of Embraer’s commercial division, noted that by 2030, an average of 40 aircraft in the sub-76-seat category will be retired annually in the U.S.

“Significant replacement demand is expected to favor Embraer, given U.S. market regulations,” Mr. Souza said. A union agreement limits the weight of regional jets to 39 tonnes, which is why the heavier E2 model does not compete in the U.S. regional market, unlike the E-175.

“While this demand is primarily for replacement, we also see interest in fleet expansion, as evidenced by American Airlines,” he added. According to Mr. Souza, American Airlines’s order has spurred interest from other groups in the country.

In addition to replacing older E1s, a model launched in 2004, the company aims to capture the market for renewing Bombardier’s CRJ 700 and 900 fleets.

Another focus area is the business jet division. Alvadi Serpa Junior, director of market and product intelligence for executive aviation, highlighted that the company aims to capture market share from Cessna’s Citation Latitude with increased sales of the Praetor 500.

Currently, the Praetor 500 holds 33% of the mid-size business jet market, with the Latitude holding the remainder. Mr. Serpa Junior attributed this to deliveries to NetJets, the world’s largest fractional jet ownership company.

NetJets has started converting part of its purchase options for Embraer jets into firm orders—so far, five orders have been confirmed. NetJets has options for 250 Praetor 500 jets, worth approximately $5 billion. These options are not included in Embraer’s disclosed executive aviation order book, valued at about $4.6 billion. “Delivering our models to NetJets naturally balances the market,” Mr. Serpa Junior told Valor.

North America and the Caribbean are Embraer’s primary markets for executive aviation, with 57% of the manufacturer’s jets (1,015 units) in operation. Latin America accounts for 17%.

In the defense division, Embraer is considering M&A strategies in the U.S. to introduce the C-390 military aircraft. U.S. defense operations must be conducted by local companies, necessitating a partnership with Embraer. The company already collaborates with Sierra Nevada Corporation to produce the Super Tucano.

“We have a Super Tucano production line in Jacksonville. We are expanding the team and are open to partnerships with the U.S. government and acquisition opportunities,” said João Bosco Costa Jr., CEO of Embraer’s defense and security division.

To date, Embraer has delivered seven C-390 units (six to the Brazilian Air Force and one to Portugal). The order book includes 13 more units for the Brazilian Air Force, two for Hungary, four remaining deliveries to Portugal, and orders from South Korea—though the total for South Korea has not been disclosed.

The reporter’s travel costs were covered by Embraer.

*Por Cristian Favaro — São José dos Campos

Source: Valor International

https://valorinternational.globo.com/
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