São Paulo – Embraer wants to increase Arab country participation in its business. According to the president of the aircraft maker, Frederico Fleury Curado, who presented its 2010 results on Friday (25), in São Paulo, the countries of the Middle East are clients in two important markets: commercial aviation, which answered to 56% of company revenues last year, and executive aviation, which contributed with 20% of the US$ 5.36 billion in revenues. "We want to increase our presence, be it in marketing or spare parts," said Curado.
"The Arab countries have very strict air space regulations and as the sector is liberalised, the number of long-haul and regional flights will rise. Today, we have almost 100% market share (presence) in the Arab markets with the Lineage 1000 (model)," said Curado. He also said that the Middle East offers challenges in the development of aircraft. "Development must be robust and the quality of cabins must be good, as they require good first class. There is much sand in the region and the aircraft needs to be able to cope. We are pleased". According to Curado, only one Lineage aircraft did not go to the Middle East. Last year, the company delivered eight aircraft of the model.
Curado also recalled the Embraer 175 delivered this week to Oman Air. The aircraft has a capacity for the transport of 71 engers (11 in executive class and 60 in economy) and was the first delivered to an Arab nation this year. Another two aircraft – out of five – should fly for Oman Air in 2011. "We also have important clients in the Middle East in the sector of executive aviation. We have delivered aircraft in Kuwait, Qatar and the United Arab Emirates," he said. Among the commercial aviation companies which fly Embraer jets are Egyptair, Oman Air, Royal Jordanian, Saudi Arabia and Nasair.
Countries in the Middle East answer to around 4% of Embraer revenues, and the main clients are European airlines (33% of the total), Asia/Pacific (22%), Latin America (15%), Brazil (13%) and North America (13%). He said that instability in Libya and the earthquake in Japan have not, for the time being, affected company operations.
Apart from the lower revenues (the US$ 5.49 billion revenues of 2009 dropped to US$ 5.36 billion in 2010) Embraer had a slight reduction in profit and in the order back 2010. Net profit was US$ 330.2 million. This result is slightly lower than in 2009, when net profit totalled US$ 465.2 million. In 2010, the company delivered 100 commercial jets (in 2009 delivery had reached 122) and 144 executive jets (more than the 115 of 2009). The order backlog, which totalled US$ 20.9 billion in 2008, dropped to US$ 16.6 billion in 2009 and fell again to US$ 15.6 billion in 2010. According to Curado, the main challenges for Embraer are the greater cost of labour on the domestic market and exchange rate. Airlines, in general, are affected by increases in oil prices.
This year revenues should grow 5%, to US$ 5.6 billion. Of this total, US$ 3.1 billion should come from commercial aviation, US$ 1.2 billion from executive aviation, US$ 700 million from aeronautics services and US$ 600 million from defence and security.
Curado recalled that Embraer should continue investing in the development of aircraft, especially the Legacy 450, Legacy 500 and the military KC-390. Although the company has US$ 691.8 million in the till, Curado said that there is already a line of credit available at the Brazilian Development Bank (BNDES).
*Translated by Mark Ament
