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Embraer sees 150 regional plane orders through 2015

Embraer, fresh off leading a round of US regional jet orders, may sell as many as 150 planes through 2015 as carriers seek more economic upgrades, said chief executive officer Frederico Curado.

The planemaker’s strategy of updating its jets rather than building an all-new family of planes is paying off as US airlines are expected to substitute 600-800 50-seater regional jets for larger and more fuel-efficient planes, Curado said. Embraer foresees about 150 of those will be updated in the next two years. New competitors, like Mitsubishi Aircraft Corp, are failing to keep pace with Embraer.

“We conquered a good part of the first wave of orders last year,” Curado said in an interview. “Let’s see if we can maintain that market share with the second wave.”

Embraer is investing about $1.7 billion in its second-generation E-2 jet programme to compete against Mitsubishi, Sukhoi Co and Bombardier, Curado said.

“Mitsubishi and Sukhoi will take some market share, for sure, but Embraer is the world leader,” Curado said. The first E-2 model is on schedule and expected to start delivery in 2018. Embraer has firm orders for 150 of its new jets.

The optimism comes as the Sao Jose dos Campos, Brazil-based company’s main competitor, Montreal-based Bombardier, cut 1,700 aerospace jobs this week to preserve cash after delaying its new CSeries jets for the fourth time. Embraer expects to maintain its position as the biggest seller of regional jets after announcing firm orders from US airlines for 327 new and second-generation planes last year.

Bombardier’s CSeries program has cost $3.9 billion so far, and the company has secured 198 firm orders. The CSeries won’t enter into commercial service until late 2015 instead of this year because it needs more time for tests.

Embraer deliveries and revenue should see “a little growth” in 2014 compared to last year, Curado said. The company delivered 90 commercial jets and 119 executive jets last year and annual revenue is estimated at 14.2 billion reais ($6 billion), according to 16 analysts surveyed by Bloomberg.

Embraer rose 31 per cent last year, and rose 0.6 per cent to 19.65 reais at in Sao Paulo trading. Bombardier rose 23 per cent in 2013.

“We have a very comfortable balance sheet,” Curado said. “We have positive cash flow, more cash than debt, and we’re well structured for our investment plan.”