First published in AMS business magazine. Author: Matt Farquharson
When we think of Brazil, we tend to think of football, favelas and flamboyantly clad Carnival dancers – and not of vast aeronautical enterprises. After all, this is the land of samba, sun and toned bodies on golden beaches; heavy industry comes in some way down the list of common associations.
But Brazil is also home to Embraer, a €3.6 billion-a-year business that is the third-largest commercial jet manufacturer in the world, leading the pack that chases Airbus and Boeing. Embraer currently has more than 19,000 staff and delivers around 200 aircraft per year. Since 2007, a steady flow of those planes have been heading to Dutch airline KLM Cityhopper, prompting the Brazilian firm to move its European Headquarters to Amsterdam. To be closer to its Dutch client is obviously the first reason to do so, but not the only one, says CEO Frederico Curado: ‘Amsterdam has always been an enterprising city, embracing industries and companies that want to have a global footprint. We appreciate its transportation tradition, based on its excellent location and vanguardist approach to business. Also, Amsterdam is a powerhouse of multicultural talent, bringing diversity that every company can benefit from.’
It’s part of a strategy that Curado refers to as the company’s ‘evolution from being a Brazilian company that exports to the world to a global company headquartered in Brazil’. Beyond its native land, Embraer now has half a dozen offices in the US, seven in Europe (including Amsterdam), two in China and one each in Dubai and Singapore. The European market now accounts for 11% of revenues the firm, which supplies aircraft to 70 different airline fleets plus militaries around the world.
But Brazilian aviation had somewhat humbler origins. After the Brazilian government set up an Aeronautics Ministry in the 1940s, the first aircraft produced (by the Aeronautical Center of Technology, or CTA) was the remarkable Convertiplano, a kind of giant predecessor to today’s camera drones. It had four propellers, one for each corner, so it could hover upwards like a helicopter before flying forwards like a plane. Large-scale commercial success did not follow.
It wasn’t until the late 1969, when the government established Embraer Brasileira de Aeronáutica and began producing the EMB 110 Bandeirante, the first medium-sized commercial craft to come out of Brazil (whose first prototypes were also developed by the CTA), that Brazilian aeronautics became a viable operation. Alongside military contracts, Embraer developed a niche in small, commercial airliners, led by the twin turboprop commuter, the EMB 120 Brasilia.
But things only really began to bloom with privatisation in the early 1990s. After decades of slow development, Embraer, like much of the Brazilian economy, was hit hard by the global recession of the early 1990s. Amid sudden staff cuts and on the verge of bankruptcy, the airline was privatised in 1994, its investors partly attracted by the newly developed EMB 145, a regional jet that could be built and operated for little more than a turboprop and that could seat 50 passengers. The firm’s future was secure, as was its target market, and as its offering expanded to small business jets and regional airliners with around 40 to 120 seats, business blossomed.
Spreading its wings
The privatised Embraer really began to take off after the Paris Air Show in 1999, thanks to the launch of the E-Jet family of planes. Almost 1,200 of these have been delivered since 2004, making Embraer the world’s largest supplier of commercial jets seating up to 120 passengers. Another 750 are on order or optioned, and the range has now been sold to more than 50 countries.
The planes are particularly popular with low-cost and short-haul carriers. Republic Airlines ordered 191 E-Jets, and JetBlue and Compass have more than 60, as does Shuttle America, with another 55 on order. For most airlines in that market, it often comes down to a straight choice between Embraer’s E-Jets or Bombardier’s C Series, and the Canadian and Brazilian rivals find themselves duking it out for tenders across the globe.
The company’s growth has run alongside successful forays into the private jet business, too. Embraer’s Phenom, Legacy and Lineage families range from the very light Phenom 100, which seats just four, to the Lineage 1000: a variant of the E190 passenger jet (which seats 100), but laid out as a private plane with roomy seating for just 19.While trips on those might be few and far between for the average passenger, the growing fleet of Embraers used by Cityhopper (on course to be 40+ planes by 2018) means there’s a good chance you’ll come across one the next time you take a short hop from Amsterdam’s Schiphol Airport.