Jetrader - Winter 2016 - 47

Bob Cowgill
Senior ISTAT Appraiser
Managing Director, Airliner Price Guide
Tel: +1 (540) 428-388
bcowgill@aciaviation.com

CREDIT: EMBRAER

appraisal

Embraer 175

Background
The first stretch of the Embraer "E-Jet"
family of regional aircraft, the 175 made its
first flight in March 2004. First deliveries
were to Air Canada in July 2005 with an
MTOW of 38,790 kg. General Electric CF34-8E
engines produce 14,200 lbs. (62.28 kN) of
thrust. The LR version increases MTOW by
2,820 lbs. (1,290 kg) above the standard
configuration while the AR variant features
an MTOW of 89,000 lbs. (40,370 kg) and a
slightly higher maximum landing weight.
Maximum seating is 78 in a two-class configuration, although most North American
aircraft are equipped with 76 seats
When it was introduced in 2004, the 175
was not expected to be the star performer
that it has become. Significant orders for the
entry-level 170 were coming in from Republic
and US Airways while, just a few months later,
the introduction of the 114-seat (single-class)
Embraer 190 generated substantial orders
from JetBlue and Air Canada. Fortuitously for
Embraer, the evolution of pilot contracts in
the U.S. permitting the use of regional aircraft
that were responsible for much of the 50-seat
RJ boom of the late 1990s and early 2000s
were relaxed to allow increasing numbers of
aircraft up to 76 seats. The resulting demographics of the type speak for themselves as
the vast majority are operated by U.S. regionals on behalf of the largest legacy airlines;
namely American, Delta and United.
The blessing-in-disguise that came with the
introduction of 76-seat pilot s clauses, which,

however, has shown its darker side in the guise
of the 86,000 lb. MTOW limitation that was
attached to these contract provisions. This
weight restriction prohibits, at least for now,
the introduction of at least two airframes
coming to market: The Mitsubishi MRJ90 and
the worthy successor to the 175, the Embraer
175E2. With expected MTOW's of 87,303 and
97,731 respectively, both are coming into a
U.S. market which, from a labor perspective,
is hostile to any changes in scope.
At September's ISTAT European Conference
in Barcelona, one industry media source
quoted an Embraer executive: "...Scope stops
new and more efficient aircraft from getting to
market." In this view he is correct but, in the
current environment, it also doesn't matter.
One need only look at two developments in
the evolution of scope: 1. A pilot shortage,
which has increased the bargaining power of
pilot's unions and 2. Within those unions, the
ascendancy of thousands of pilots who were
furloughed or whose careers stagnated during
the early-to-mid-2000s while watching their
airline's regional partners expand the use of
RJs. These two factors provide no comfort to
those who believe that scope must be relaxed
no matter the economic arguments.
Fortunately for Embraer, the current generation of the 175 is both compliant and popular. All of the 10 parked aircraft listed above
are Republic aircraft which are likely in the
process of transfer to AAL subsidiary Envoy.
The firm order backlog of 130 aircraft is the
largest of any Embraer airframe including the

Embraer 175 Current Fleet &
Backlog as of October 2016
In Service

Backlog

Stored

8
9
45

-
-
18

-
-
-

4

-

-

331
-
396

107
5
130

10
-
10

Africa/Middle East
Asia/Pacific
Europe + CIS
Latin/South
America
North America
Undisclosed
Total

Embraer 175 Current Fleet &
Backlog as of October 2016
Carrier
Republic (US)
SkyWest (US)
Compass (US)
Mesa (US)
Envoy (US)
Sky Regional (Canada)

Aircraft in Service
101
68
56
48
22
20

updated E2's. This factor alone provides strong
value support for the type. Horizon Air's order
for 30 along with 33 options is significant.
The competitive environment for the
current generation of 175s is positive, as
the Mitsubishi MRJ90, it's only clean sheet
competitor, may be delayed beyond its currently stated mid-2018 introduction and, as
mentioned before, remains overweight. As for
Bombardier's offering, the CRJ-700 and -900,
backlogs are dwindling as the airframe ages
and the Canadian manufacturer focuses its
attention on the C-Series.

Embraer 175LR Passenger Current and Future Values assuming 2% annual inflation
YOM CMV
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

13.73
14.65
15.61
16.64
17.82
19.08
20.42
21.97
23.62
25.40
27.30
29.34

2016
CBV
13.73
14.65
15.61
16.64
17.82
19.08
20.42
21.97
23.62
25.40
27.30
29.34

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
12.86
13.73
14.65
15.61
16.73
17.91
19.16
20.60
22.14
23.77
25.52
27.38

12.03
12.86
13.73
14.65
15.70
16.82
17.99
19.34
20.77
22.28
23.89
25.60

11.23
12.03
12.86
13.74
14.74
15.79
16.90
18.16
19.50
20.91
22.40
23.97

10.47
11.24
12.04
12.87
13.82
14.82
15.87
17.06
18.31
19.63
21.01
22.47

9.74
10.48
11.25
12.05
12.96
13.90
14.90
16.02
17.20
18.43
19.73
21.09

9.04
9.76
10.50
11.27
12.13
13.03
13.98
15.04
16.15
17.32
18.53
19.80

8.37
9.06
9.78
10.52
11.34
12.21
13.11
14.12
15.17
16.27
17.42
18.61

7.72
8.39
9.08
9.80
10.59
11.42
12.28
13.24
14.24
15.28
16.36
17.49

7.09
7.75
8.42
9.11
9.87
10.67
11.49
12.40
13.36
14.35
15.37
16.43

6.49
7.12
7.78
8.45
9.18
9.94
10.74
11.61
12.52
13.46
14.44
15.44

5.90
6.52
7.16
7.81
8.52
9.25
10.01
10.85
11.72
12.62
13.55
14.50

5.34
5.94
6.56
7.19
7.88
8.59
9.32
10.12
10.95
11.81
12.70
13.62

4.78
5.37
5.98
6.60
7.26
7.94
8.65
9.42
10.22
11.05
11.90
12.77

4.25
4.83
5.42
6.02
6.66
7.32
8.01
8.75
9.52
10.31
11.13
11.96

3.73
4.29
4.87
5.46
6.08
6.73
7.39
8.10
8.84
9.61
10.39
11.19

3.22
3.78
4.34
4.92
5.52
6.15
6.79
7.48
8.19
8.93
9.68
10.46

2.73
3.27
3.83
4.39
4.98
5.58
6.21
6.88
7.56
8.27
9.00
9.75

2.79
3.33
3.88
4.45
5.04
5.65
6.29
6.96
7.64
8.35
9.07

2.84
3.38
3.94
4.51
5.10
5.73
6.37
7.03
7.72
8.41

2.90
3.44
4.00
4.57
5.18
5.80
6.45
7.11
7.78

Jetrader * Winter 2016 47



Jetrader - Winter 2016

Table of Contents for the Digital Edition of Jetrader - Winter 2016

A Message from the President
Calendar/News
Q&A: Joe Ozimek, Former Managing Director, Aircraft Programs & Valuations, Boeing
BikeSTAT Barcelona 2016
ISTAT Europe: Ascending to New Heights
Gear up for Business: ISTAT’s 2017 Events
It’s Not Easy Being Green
ISTAT Appraisers’ Program and Aircraft Appraising — An Appreciation
Voodoo Walkover Victory
ASC 360 Impairment Testing for Commercial Aircraft Under Operating Lease
From the ISTAT Photo Archives
Aviation History
Aircraft Appraisals
ISTAT Foundation
Advertiser Index
Advertiser.com
Jetrader - Winter 2016 - cover1
Jetrader - Winter 2016 - cover2
Jetrader - Winter 2016 - 3
Jetrader - Winter 2016 - 4
Jetrader - Winter 2016 - 5
Jetrader - Winter 2016 - 6
Jetrader - Winter 2016 - A Message from the President
Jetrader - Winter 2016 - 8
Jetrader - Winter 2016 - 9
Jetrader - Winter 2016 - Calendar/News
Jetrader - Winter 2016 - 11
Jetrader - Winter 2016 - Q&A: Joe Ozimek, Former Managing Director, Aircraft Programs & Valuations, Boeing
Jetrader - Winter 2016 - 13
Jetrader - Winter 2016 - BikeSTAT Barcelona 2016
Jetrader - Winter 2016 - 15
Jetrader - Winter 2016 - ISTAT Europe: Ascending to New Heights
Jetrader - Winter 2016 - 17
Jetrader - Winter 2016 - 18
Jetrader - Winter 2016 - 19
Jetrader - Winter 2016 - 20
Jetrader - Winter 2016 - 21
Jetrader - Winter 2016 - 22
Jetrader - Winter 2016 - 23
Jetrader - Winter 2016 - 24
Jetrader - Winter 2016 - 25
Jetrader - Winter 2016 - Gear up for Business: ISTAT’s 2017 Events
Jetrader - Winter 2016 - 27
Jetrader - Winter 2016 - It’s Not Easy Being Green
Jetrader - Winter 2016 - 29
Jetrader - Winter 2016 - 30
Jetrader - Winter 2016 - 31
Jetrader - Winter 2016 - ISTAT Appraisers’ Program and Aircraft Appraising — An Appreciation
Jetrader - Winter 2016 - 33
Jetrader - Winter 2016 - Voodoo Walkover Victory
Jetrader - Winter 2016 - 35
Jetrader - Winter 2016 - 36
Jetrader - Winter 2016 - 37
Jetrader - Winter 2016 - ASC 360 Impairment Testing for Commercial Aircraft Under Operating Lease
Jetrader - Winter 2016 - 39
Jetrader - Winter 2016 - 40
Jetrader - Winter 2016 - 41
Jetrader - Winter 2016 - From the ISTAT Photo Archives
Jetrader - Winter 2016 - 43
Jetrader - Winter 2016 - Aviation History
Jetrader - Winter 2016 - 45
Jetrader - Winter 2016 - 46
Jetrader - Winter 2016 - Aircraft Appraisals
Jetrader - Winter 2016 - ISTAT Foundation
Jetrader - Winter 2016 - Advertiser Index
Jetrader - Winter 2016 - Advertiser.com
Jetrader - Winter 2016 - cover3
Jetrader - Winter 2016 - cover4
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