Jetrader - Summer 2014 - 13

the E2, we expect to have 100 customers
in over 50 countries. Understanding that
a big resource of any OEM is incumbency,
it's reasonable for Embraer to make the
assumption that our market leadership
position will be maintained. One of the
recent reflections on that was captured
in the Airfinance Journal Investors and
Operators Poll that rated both the E1 and
the E2 as superior investment grade assets.
JT: You mentioned Embraer's goal of
expanding its operator base. What do
you see as the most promising markets
for that expansion?
JS: Earlier this year, we announced a
very large transaction in India with Air
Costa for 50 firm E2s aircraft. We were
very keen to penetrate the Indian market,
being one of the largest growth markets in
the world with over a billion citizens. I can
see a significant number of E-Jets in India
over the course of the next five to 10 years.
In addition to that, China continues to be
a very strategic market for us. Of the inservice jet fleet below 130 seats, we have
over 80 percent market share in China.
We are pleased to have the aircraft
approved and certified to operate in Russia.
That happened just over a year ago. We
already have one operator, and we are
about to announce a second operator of
the E-Jets. We see Russia as a market that
will continue to grow our operator base,
complimenting their domestic capacity
from their domestic OEMs.
The Latin America market will continue to be very strong for us. Places like
Brazil, Mexico, Argentina and others in
Latin America will be very strong markets.
Whilst Embraer recognizes the enormous opportunities in the emerging markets, we also have enormous opportunities
in developed markets. Sometimes it's a
little "flavor du jour" to talk about the
emerging markets, but the established
markets of Western continental Europe
and North America are large markets for
us. You talk about airlines like Air France,
KLM, Lufthansa, British Airways, Alitalia-
these are the flag carriers of the West. In
North America, last year alone we welcomed United and American as E-Jet buyers. SkyWest is now a significant buyer of
E-Jets, both E1s and E2s, and the largest
regional airline in the world. We also have

We have been building aircraft for 44 years,
and today it's clear to the market that our
customers enjoy a level of after-sales support
that is recognized as best of breed-no question.
jetBlue, one of our larger E190 operators.
Of course, Azul in Brazil is the poster child
of our home market in Brazil.
Our target is to have 100 operators
around the world in over 50 countries by
the entry into service of the E2. And I
think we can say that now with a level
of confidence and credibility that our
competitors can't. We're here having this
interview at an ISTAT event. The key part
of the constituents that come to these conferences are appraisers, banks and lessors.
For them, the core common denominator of
success is residual value. And one of the
key drivers of residual value is having that
broad franchise footprint; meaning a broad
operator base.
JT: During the panel discussion at the
ISTAT Americas conference, you spoke of
Embraer's support after entry into service. How do you feel this distinguishes
Embraer from the competition?
JS: We think that it is one of our major
selling propositions when you consider
Embraer relative to our direct competitors. We have been building aircraft for
44 years, and today it's clear to the market
that our customers enjoy a level of aftersales support that is recognized as best of
breed-no question. We have a strategic
target to be the No. 1 airframe OEM for
after-sales support for airlines in the world.
The trajectory that we're on right now,
as evidenced by our annual pulsing of our
airline customers, would suggest that we're
on the right path to that target. We invest
a lot on that. We do not outsource it. We
are very committed to our operators. One of
the obvious justifications and validations
of that is that you see Embraer's customers
ordering again and again. An airline typically would not come back and reorder, if
they were not happy with the after-sales
support. We're seeing a lot of customers
continuing to order the current generation
of aircraft. In addition to that, you'll see
some of those customers ordering the E2.
They have the confidence, the track record

and the knowledge of how Embraer operates
and supports them.
JT: Switching gears, let's talk about
the geared turbofan (GTF) engine.
What's your opinion of the engine and
its progress?
JS: We're very excited about our partnership with Pratt & Whitney for the E2.
Pratt & Whitney is a long-time strategic
vendor to Embraer on many programs across
the group, but this is the first time they
are providing engines for the E-Jet program. We're very close to Pratt & Whitney
in following the program, and we have
absolutely no reason to believe anything
other than the program will be on time
for the E-Jets. We are taking advantage
that very similar power plants can be used
for the MRJ and the CSeries, which may
enter into service just before the E2-at
least that's what they're telling us. We'll
take the benefit of those power plants
being tested, before they get into the E-Jet
platform, which enters into service in the
first half of 2018. We're very happy with
what Pratt & Whitney is doing and about
the GTF technology. We're pleased with
Pratt & Whitney's commitment to keeping maintenance costs competitive for our
airline customers.
JT: What's your view of ISTAT in general,
and how would you rate your experience
at the ISTAT Americas conference?
JS: I've been coming to ISTAT events
for 15 years. This conference is the biggest
I think I've been at. It's spectacular. I'm
very grateful to ISTAT for allowing Embraer
to be a part of the very first panel of the
U.S. event here in San Diego. It's a great
testament to the increasing interest from
the investors and traders in our part of the
market. ISTAT generates one of the, if not
the, most comprehensive series of conferences in the world today. This is something
that is owned by the members and provided
for the members, very cost-efficiently. I am
a very proud ISTAT member.
Jetrader * Summer 2014 13

Jetrader - Summer 2014

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