Some days are just plain better than others- and the day Embraer phoned to suggest a visit to Brazil was definitely a good one. The perfect opportunity to learn first hand about its new range of business jet aircraft… and- the company’s hospitality is legendary. Embraer has three major factories; an H.Q. and major site at São José dos Campos- an hour’s drive from Sao Paulo- the financial heart and ...
Embraer’s Rapid Ramp-Up
The inside story from the Brazilian plane maker.
Some days are just plain better than others- and the day Embraer phoned to suggest a visit to Brazil was definitely a good one. The perfect opportunity to learn first hand about its new range of business jet aircraft… and- the company’s hospitality is legendary.
Embraer has three major factories; an H.Q. and major site at São José dos Campos- an hour’s drive from Sao Paulo- the financial heart and second city of Brazil; a test airfield and production site at Gavião Peixoto; and a factory at Botucatu. We were squashing a lot of work into two days and the only way to get around was by corporate jet aircraft - an Embraer Legacy 600- naturally.
Embraer didn’t even contemplate sending us by road - it wanted to underline the point of business jets – to cover a lot of ground in the most efficient way. So 40 minutes after taking off from São José dos Campos we were greasing the runway at Botucatu- the birthplace of the Phenom 100 and 300. The production facility is being expanded by 95-800 square feet and reconfigured to incorporate the sub-assembly lines of the Phenom 100 and the Phenom 300.
Investment is around $50 million over the next two years. The plant- which is responsible for the production of Phenom wings and fuselages- is undergoing rapid expansion to keep pace with Embraer’s aggressive build and flight certification program.
To meet demand the workforce is being strengthened from 1-700 to around 3-000 by the end of 2008. Embraer is cherry-picking potential workers from four local schools and colleges - the first 390 16-17 year-olds started work last March on an apprenticeship scheme- and a selection process to hire another 400 is underway. The company sees this as vital to its own interests as well the nation’s high-tech future.
The Botucatu factory is also famous for the Ipanema crop sprayers that even had oil man George W. Bush scurrying down to Brazil recently to improve his green credentials. Why? All new Ipanemas are fueled by alcohol extracted from locally grown sugar cane!
Our next Legacy leg- took us 20 minutes and 106 miles north to Gavião Peixoto Test Center (a bit like the UK’s military Boscombe Down but with military aircraft for sale production too)- and the Phenom Production Line. The facility opened in 2001 and boasts the longest private runway in the world at 5km (16-404ft) complete with a test water ingestion trench. Over $72 million has been invested on this huge site since start-up.
A 128-844 sq.ft Phenom 100 and 300 final assembly facility is under construction here- complete with a two-booth custom paint shop- and all to be completed this month. The first aircraft to be assembled here will be the fourth Phenom 100 built; after this- all Phenom 100 and 300 final assembly will occur here. Botucatu will continue the pre-assembly and aircraft sections will then be roaded to Gavião Peixoto.
The case for VLJs
Embraer believes that more airline premium passengers are under-served than ever before. Airport hassle and less choice of destinations are to blame- not to mention the minimum two-hour check-in which is enforced whether you pay $1 or $1-000 for your ticket.
The current choice for top executives is either to fly premium class on an airline or charter an executive jet. Luis Carlos Affonso- executive vice president- Embraer Executive Aviation- commented that 73 percent of US passengers fly out of 35 hubs and 90 percent of delays are at those hubs. Terrorism threat and poor service is also driving top passengers to consider alternatives.
Embraer says the right VLJ can fill this gap- with branded business aircraft charter- air taxi- or still evolving business models as alternatives. JetBird in Europe has ordered 50 firm Phenom 100s and 50 options (which may include Phenom 300s) for its ‘On demand Private Airline- while in the U.S. Avantair has ordered 20 Phenom 100s for its fractional program.
According to an Embraer analysis- from 2007 through 2016- the VLJ- Light and Mid-Light categories of business jets will account for 45 percent of all business jets (11-115 new aircraft worldwide worth $169bn) delivered. Its total figures for Europe- Africa and the Middle East suggests that 2-125 (valued at $41bn) new VLJ/L and ML aircraft will represent 43 percent of this market. The analysis does not even count a potential 2-500-3-000 air taxi ‘orders’.
The cost of acquiring executive business jets has become cheaper for those outside of North America- because of the strong Euro and Pound Sterling against the US Dollar. Marco Tulio Pellegrinni- vice president- Market Intelligence- Embraer Executive Jets- says- “Premium flights are down 25 percent since 2000 because of hassle factors. European charter operator revenues increased by 26 percent in 2006. NetJets Europe- which made its first profit in 2006- has over 1-000 customers and increased its fleet dramatically. Customer numbers at Private Jet- the Lufthansa/NetJets tie up- are growing by 14 percent per month.”
Phenom 100 and 300
Three Phenom 100 and three Phenom 300 conforming aircraft are currently being built for the flight test/certification phases- and Embraer regards these as conforming aircraft- not prototypes. The first Phenom 100 is due to fly this summer with certification and first customer delivery set for 12 months later. The first metal has been cut on the first Phenom 300 which is due to fly in the summer of 2008- with first deliveries by mid-2009.
Mass production will start with 15-20 Phenom 100s in 2008- and then move up a gear to 120-150 Phenom 100 and Phenom 300s during 2009. According to Affonso this is the fastest ramp-up the company has ever attempted - even faster than for the ERJ-145 Regional Jet and E-170/195 families.
Current total orders for both versions are fast approaching 400 firm plus 100 options- from 24 countries (including- surprisingly- Latin America and India)- with the majority being for Phenom 100s. Orders are split approximately 40 percent each between fleet operators and individual owners (those who employ a pilot)- and owner pilot orders account for around 20 percent.
The Phenom 100 unit cost has gone up from $2.85 million to $2.95 million- with a possible further price rise after EBACE- Affonso warned. The current cost of a Phenom 300 weighs in at $6.65 million. If you order either Phenom model now- you can’t get one until 2011.
“Phenoms are seen as a replacement for older business jets- rather than for twin piston engine aircraft- single piston engine airplanes and business turboprop aircraft. However- many buyers are moving up from Beech Barons and Piper Senecas- with a lot of orders coming from people who have never owned an aircraft before. We see all fleet customers flying with two pilots-” revealed Affonso.
“The Phenom 100 is designed from the outset to perform 35-000 cycles- or around ten years utilization- the competition is offering about 15-000 cycles-” he explained. “This will result in better residual value for owners. The 300 will have an incredible hot and high performance- single-point pressure refueling- externally serviced lavatory and brake-by-wire with standard anti-skid. The aircraft is designed for 35-000flt hours or 28-000 cycles.”
The final assembly of the initial six aircraft is at São José dos Campos where the first Phenom 100 has rapidly taken shape since March this year. Fuselage/wing mating and test mating of the PW617F engines took place just the day before our visit. The anemometric- oxygen and hydraulic systems are already installed as well as the main landing gear. The first engine run on aircraft is expected this month.
Phenom 100 and 300 crew training is a joint venture between Embraer and CAE using the CAE 5000 Full Flight Simulator. The first European training center will open in 2009- at an unnamed location- but logically at CAE’s UK executive jet training center near Gatwick Airport. The first in the US is to be at CAE’s Dallas flight training center in 2008- a second in Florida in 2010- and a third- yet to be announced- by 2012. Mentor pilot training will also be available for owner pilots.
Embraer is extending its Executive Care airframe and engine packages to Phenom owners with varying degrees of cover. Aircraft health monitoring is also being offered and will include real time aircraft health data monitoring via the Iridium satellite to ground stations.
As far as the Phenom 100’s competition is concerned- Affonso says he regards the Honda Jet as the most serious threat. “The HondaJet is 20 percent more expensive ($3.65 million – first deliveries 2010) but Honda will eventually be a strong competitor once they’ve got through the tough certification processes for the first time.” Embraer believes the Cessna Citation Mustang isn’t designed for the high utilization required for the corporate charter market.
As reported in the May issue- the 100th Legacy was recently delivered to the Czech Republic- representing the 19th country to which the aircraft has been delivered.
Market share worldwide of this $24.7 million aircraft is 13.6 percent in the super mid-size category- and Embraer projects a slight increase to 15 percent through 2007-2016. The company saw a 35 percent delivery growth for these aircraft in 2006.
Embraer produced 27 Legacy 600s in 2006 and plans 25-30 for 2007. So far 11 of the 100 Embraer Legacy business jet aircraft delivered have been fitted with 5.5 degree steep approach modifications.
Completing the present in-development/certified corporate jet family from Embraer- the long range- $40.95 million- corporate jet version of the Embraer 190- the Lineage 1000- has an order book standing at ‘close to ten aircraft’- ordered by Government- high net worth individuals and companies from Europe- Middle East and Asia Pacific regions. “There is interest from the U.S. but no orders yet-” explained Affonso. The company plans to produce up to two aircraft in 2008 and three to four in 2009- with an expected production run of at least ten years. First customer delivery is set for mid-2008.
It will be produced on the E-190 production line- then pulled off to enter a specialist hangar. The first aircraft will be flown to Patts Aircraft- LLC- a division of DeCrane Aircraft- in the US- to have its twin fuel tank system installed in the third quarter this year. Aircraft number two will be modified in Brazil.
The E-190 is Stage IV noise compliant- but as the Lineage 1000 is heavier- and Embraer is flight testing this. The aircraft will be offered with 5.5 degree certification 18 months after first delivery. Embraer says the aircraft will be able to operate into London City Airport (making it the largest aircraft to operate there)- Aspen and Teterboro. The BBJ cannot offer this- and only Airbus’s smaller cabin A318 Elite could compete for this market segment- according to Embraer.
The Lineage 1000 will be offered with dual or single Head-Up-Displays as already certificated on the E-190. The five cabin interior- designed by Priestman Goode of London- UK- offers a ‘one of a kind’ configuration with potentially 5-000 different customer options.
On the customer service front- Embraer is to expand its Authorized Service Centers around the world to 45 by mid-2008. To give full customer care there will be an Embraer representative at each center- not a sub-contractor- explains Mauricio Rodrigues Aveiro- vice president- Customer Support- Executive Aviation. Its Le-Bourget service center to support the Legacy 600- initially- will be operational by the fourth quarter this year- and construction starts in the third quarter on three new service centers at Williams Gateway- Mesa- Arizona- Fort Lauderdale- Florida- and Bradley- Hartford- Connecticut. OGMA in Portugal will be the center of Lineage 1000 aircraft maintenance in Europe.
So what are the future plans for Embraer? “We are going to fill in the gaps in our product line with either one or two aircraft positioned between the Phenom 300 and the Legacy 600-” said Affonso. “But no firm decision has yet been made.” Affonso told us that the longer-range segment- above the Lineage 1000- is “farther away” in Embraer’s future plans. On market share he told us – “Over the next five years we want to achieve 15 percent market share with the Legacy 600 (see above). Over the next ten years we have an aggressive target for the Phenoms- with a market share goal of 30 percent- and with the Lineage we are aiming at 20 percent over the same period”.
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