São Paulo – Embraer forecasts a difficult year for the economy in 2012, worse than in 2008, but Brazil may exit the crisis stronger than on that occasion, the company’s president Frederico Curado said in São Paulo this Tuesday (13th). For 2012, Embraer is planning to increase its revenues from commercial aviation and investment, and will open an engineering office in the city of Belo Horizonte. The company is also waiting for the result of a tender in the United States, and waiting on a definition regarding its plant in China. As for the Middle East and Africa, the company forecasts an expansion in commercial aviation.
“The crisis next year will not be simple, but I believe Brazil may leave this crisis better than it did the previous one,” said Curado. In March 2009, the Brazilian aircraft manufacturing company dismissed 4,300 people as a result of the international financial crisis. In 2012, it intends to hire engineers. The company had aircraft purchase orders cancelled this year, though at a smaller quantity than in 2008 and 2009. “It was isolated cases,” said Curado.
In spite of the international crisis, Embraer plans on growing and developing new projects in 2012. The company president said investment should exceed the US$ 450 million invested this year. Although no projection has been made, the company is expecting an increase in revenues from commercial aircraft sales. Curado also announced that Embraer will open an engineering office in Belo Horizonte, the capital of the state of Minas Gerais. “There is a very good engineering school in Minas Gerais and we intend to take those professionals in. We will add 200 engineers to our roster in 2012,” he said.
These are not the only projects in the pipeline for next year. In 2012, Embraer should decide on what improvements will be made to the new E-Jet family generation (Embraer 170/175 and Embraer 190/195). “We will look into the demands of our clients,” said Curado. The major modifications, however, will probably reside in the turbines, similar to what Boeing and Airbus will do to their 737 and A320 aircraft families, respectively.
In early 2012, the company also expects to decide the fate of the plant it owns in Harbin, China, which was implemented in 2002. The local government forbade the company from manufacturing its EMB 145 jet there. In April this year, the Brazilian president, Dilma Rousseff, signed an agreement for another aircraft, the Legacy 600 executive jet, to be made in the Asian country. In addition to this negotiation, the company is bidding in a Defence industry tender to supply Supertucano aircraft to the United States. The contract may reach up to US$ 1.5 billion.
Embraer, however, is under probe in the United States for possible violation of anti-foreign corruption laws. Curado declined from making comments on the matter, because the company is still being investigated. If convicted, it may be forbidden from selling the aircraft.
In addition to these projects, which may confirm themselves next year, the company is building two new parts factories in Portugal. According to the vice president of Executive Aviation operations, Marco Túlio Pellegrini, these new units should send aircraft parts, such as wings, to Brazilian factories.
Middle East
The aviation market in which Embraer operates, for aircraft for up to 120 passengers, has growth potential in the Middle East and Africa, according to Curado. He said the results in the region are good and further growth is possible. “Our aircraft withstand really well the conditions found in Saudi Arabia, for example, where the weather is dry and there is lot of sand. We have many clients there and we can serve them in short-distance routes in some cases,” said Curado, explaining that the focus of major companies is on long-distance routes rather than short ones, picking up passengers in America and Europe and taking them to Asia. Embraer does not operate in long-distance routes.
He said the potential for growth in Africa is stronger than in the Middle East because the continent’s market is still under-tapped, but highly regulated, with few flights between countries. “As the market deregulates, it becomes more interesting,” he said. The executive aviation industry does not have such a promising future ahead, according to Pellegrini.
*Translated by Gabriel Pomerancblum
