EMBRAER In China, the demand for small jets is almost non-existent. Normally, people talk about the bigger planes. There is not much demand for within China for private jets. But in India, it is the contrary — because if you are a successful business entrepreneur in India and you want to move around in India depending only on the existing infrastructure or airlines and so on, sometimes you may take one or two days off your schedule to go to some places and back. And then that’s why having an efficient, small, midsized plane makes much more sense.
On the meltdown and the impact on General Aviation Well, the downturn in 2008 affected all sorts of businesses including private jets. Basically the financial crisis affected every possible business and many companies, many entrepreneurs had to have liquidity and, therefore, private jets, cars, houses, boats everything was for sale. Also, the manufacturers suffered due to postponement of deliveries. These were tough times — especially 2008-9 and to a certain extent 2010 as well. What has happened today is that the manufacturers have adjusted capacity. So there was a surplus of available airplanes in the market for sale and that, of course, was depressing prices and everything. And the worst we can do or any manufacturer could do is try to compete with a situation like that. So, everybody had to cut capacity. We had unfortunately to reduce our workforce by 20 per cent by February 2009. Unfortunately, we had to lay off something like 4,000 employees and some competitors even had to go much deeper than that. So, to an extent you know we suffered but we pretty much navigated through the storms. We kept the company healthy and we continued to be profitable regardless. We kept our promises so we continued to develop the planes that we had launched and certified the ones that were ready and going. Today, I’m not saying that we have a blue sky. What we say is the industry has a healthier backlog of orders. Demand is not as it was three years ago but again it is picking up nicely. So we see things improving with care because we live in a much more volatile economy today.
On the order book Embraer total backlog — we don’t make breakdowns by divisions — but today it is $16 billion. We delivered 99
private jets and 124 commercial jets. We said the company will be a company of revenues above $5.5 billion last year and that we met those targets.
On the India orders It’s not a big order book as one could wish for, but the good thing is that India is one of the few countries in the world where Embraer has customers for every single product we have. We announced as well the certification of the Legacy 650. This means all of our products are certified in India. All of our products are flying in India and there is a good prospect of growth. In customer support worldwide, we have invested a lot — more than $200 million — over the last five years and we have about 60 authorised service centres worldwide. In India alone, mainly during the last three years, we have made a huge investment. There are seven different locations in India where customers can count for support — through Air Works and Indamaar — and all of our product lines are now capable of being supported in India which is very good. And we have announced that we will have onsite stock in Bengaluru through Air Works for spare parts. We have a Field Service Engineer based in Mumbai and soon we will have a second guy as well. That is just to make sure that we support customers and the companies doing the support are doing the right job. So, when you look at the amount of investment that we did in support, training the people, investment in parts, investment in certifying the planes... Since a year ago we have a dedicated Sales Director who is an Indian guy based in Delhi with experience in the industry, helping to knock (on) doors and to uncover and turn every stone possible in India. That shows how big our commitment is to this market.
On the 650 — Gulfstream has one with the same number, so do you? We named it 650, I believe first! Our branding strategy when we developed the business unit for private jets was to have three differentiated segments. It is not a segment but a cluster of products and for each of them we worked with a branding company how to better communicate back to the market. So, for the entry level jet and the light jet — that is the Phenom family — and the two products are the Phenom 100 and the
CRUISING HEIGHTS May 2012
Phenom 300. On the midsized to the large, we call the Legacy family. And then you have the 450, the 500, the 600 and the 650. So there are actually four products. And on the ultra-large cabin, that is the Lineage 1000. So, all our products today and possible future products, we’ll have maybe different numbers but they will stick to these three main brands. Our Legacy 650 is one step above the Legacy 600 — that is an airplane with almost 200 units around the world. The 650 was first certified by FAA less than two years ago. What it has different from the 600 is more range basically. So you can do 3,900 nautical miles with the 650. With the 600 you can do 3,400 nautical miles. Cabin size, baggage, avionics, pilots — everything else is the same. The engine is more powerful. You have a couple of more things and you get 500 nautical miles more range. In the 2012 model that we are presenting now — and this applies both to the 600 and 650 — we have restyled interiors. We have a new in-flight entertainment system you know like Blueray and touch-screens and those kind of things. In the galley we have stone flooring now possible. So now you can choose the stone to put on the floor. That normally is a wet area. Carpets are always messy. So we said, why not be bold? It’s a few milimetres (thick) stone. It’s actual stone. It’s not synthetic material. On the tabletops, in the galley and in the sink, you have Korean synthetic (stone) because it’s light and beautiful. But on the floor, that would not resist abrasion… there you have to put stone.
On the interiors Yes. Well, we do all the seating ourselves although you know the components and parts, they come from suppliers of any other jets, but we do the fitting and finish ourselves. By the way we inaugurated last year the facility in Melbourne, Florida. So we started to produce the Phenoms in the US. We actually delivered the first ‘Made in US’ Phenom 100 in December last year and now we are growing our production. There is a customer design centre there where the customers can go. We have our interior designers. We have all these electronic and software screens and tools, materials and design rooms to sit together with the customer and choose the design.
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