Embraer launches longer-range private jets in turnaround push

Business

ORLANDO, Fla. (Reuters) – Embraer SA (EMBR3.SA) is adding two longer-range business jet variants to its mid-sized Legacy line, featuring revamped cabins and technology that reduces turbulence to create smoother flights, the Brazilian plane maker said on Sunday.

FILE PHOTO: Embraer business jet plane, the New Praetor 600 Bossa Nova Edition, is seen in this image released by Embraer North America, in Fort Lauderdale, Florida, U.S., October 12, 2018. Courtesy Embraer/Handout via REUTERS

The launch of the two Praetor models – named after Ancient Roman officials – coincides with the business jet industry’s flagship show in Orlando from Oct. 16 to 18 and comes as Embraer pursues a broader strategy to revitalize its loss-making executive jet division.

When the Praetor models hit the market in 2019, they will join a fiercely competitive space that includes Bombardier’s Challenger 350 (BBDb.TO) and Gulfstream’s G280, along with Textron’s (TXT.N) upcoming Cessna Citation Longitude.

Embraer’s corporate jet push is important because the company will no longer be able to count on its best-performing commercial division if its deal to merge that business with Boeing Co. (BA.N) goes forward.

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Embraer and Boeing announced the $4.75 billion commercial jet alliance in July. If the Brazilian government agrees the deal with Boeing, Embraer will be left with two remaining divisions, both in the red: executive jets and defense.

Embraer chief executive Paulo Cesar de Souza e Silva said on Sunday the deal with Boeing would also deliver advantages in materials purchasing for Embraer’s business jet division, but that it was too early to say how much it would save.

“It’s under discussion,” he said. “I think the partnership with Boeing will help with Embraer’s whole business.”

The business jet division has about a 22 percent market share in terms of units, he added.

The Praetor launch comes under the direction of Michael Amalfitano, who took over Embraer’s executive jet division in 2017 with a plan to deliver new features that generate higher margins.

“The customer appreciates that value and therefore that value allows us to maintain prices,” Amalfitano said at the launch.

Amalfitano said Embraer has already secured firm orders for the Praetor planes, although he declined to give figures.

The super-midsized Praetor 600 can fly four well-heeled travelers nonstop between London and New York, or eight passengers on that route at a slower speed.

For years, Embraer grew market share by offering hefty discounts on its corporate planes.

But Amalfitano has told investors he will avoid discounts in a push to grow margins to the mid-single digit by year-end.

“They are in a transition right now,” U.S. aviation analyst Rolland Vincent said of Embraer’s business aircraft.

Reporting By Allison Lampert in Orlando, Florida; additional reporting by Marcelo Rochabrun in Sao Paolo; editing by Diane Craft and Rosalba O’Brien

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