Here in Brazil, the reactions are more negative than positive. If you see the comments on Brazilian aviation forums, most people seem to be convinced that Embraer will be sold and Boeing will close assembly lines in Brazil and take it to United States ...
... Unfortunately, most Brazilians fail to see the benefits of negotiation and can only imagine the worst scenario for Embraer.
I agree with you 100% !!!
I'm not sure if Boeing knocked on Embraer's door or if Embraer knocked on Boeing's door.
But the situation is very different from that experienced by McDonnell Douglas in the 1990s and also by Bombardier, whose major shareholders (the Beaudoin family) made mistakes in market valuations and led the company into a pre-bankruptcy situation.
Regardless of the outcome of the A + BBD (CSALP) agreement, the CSeries is eating the top market in the case of our EJets E1 and E2 programs and below in the case of the Boeing 73Xs. If, after the agreement passes by the legislators and such, CSALP will have behind it the whole apparatus of a giant called Airbus, whose customer base is a possible buyer of CSeries.
However, unlike BBD, Embraer is not giving up (yet), but the dynamics of this market requires quick and well-planned actions and responses or otherwise the competitor eats us alive.
There are other factors that people are disregarding here: the bargaining power (which counts for us as well as Bombardier) when we multiply the scale many times:
- bargaining power with suppliers;
- bargaining power with your customers;
- bargaining power with those who finance the aircraft.
And this last item I believe to be of a concern for Embraer with certainty, since the main financier of our aircrafts, the BNDES - National Bank of Economic and Social Development, is being forced by the federal government to return to it a huge sum contributed to the bank and in order to that the public accounts close the year in a good content.
"Government receives R $ 33 billion from the BNDES."
The interests charged by BNDES are compatible with international rates. However, when external financing is needed due to the lack of this financing, interest rates tend to be higher given the risk of the business or the "Brazil risk" that fluctuates according to the international agencies that give us a good or a bad investment notes.
The aerospace industry has a long-term maturity: considering that from the first market studies until the delivery of the first serial units, we can put there at least 5 years if everything goes according to plan and without major surprises in the project. In the meantime, there is a risk that the market will adapt or change to a different reality from that previously prospected, requiring readjustment or even the cancellation of the project. A good example of this is the Leajert 85:
source: https://www.flightglobal.com/news/artic ... ss-418367/
Within the commercial area, Boeing currently concentrates its R&D capacity on the new 777X, 787-10, 737 MAX10 and the "supposed 797".
On our side, in the commercial area Embraer is finalizing the E190-E2 certification process and next year the same to the E195-E2, and we have pending what will be the future of the E175-E2, although I believe that maybe the company has given the green light to the continuity regardless of what's going to come out with such "mainstream" scope clauses.
As resources are finite even for a Boeing and if we consider, for example, that with the MAX the Boeing Co. reached the limit of development of the 737 requiring in a future already visible a product that will replace that family, added to this the new "supposed 797", it is natural that we believe that Embraer's smaller participation in the development and manufacturing of these aircraft would provide us excellent benefits.
Embraer is prospecting for a future turboprop aircraft of "supposed" 70 seats. It also has a project together with UBER (beyond the year of 2024).
But by reaffirming what the company president said, this will only be resumed after 2022 when the three E2 family aircraft begin to make the expected financial return on their sales. In that interim, I see the company with hands tied for new projects.
Of course I'm talking about the commercial division. Both the executive and defense divisions apparently are not at the negotiating table ...
And then I ask you all: what to do with all those involved in the project that now ends and goes into production line ??? What to do from today until at least 2022 ???
I'm sure you people know the answer ...
Friends, lower your guard, wait for the events because the story is moving forward.
A hug to everyone …