Embraer Opts for New Engines

Embraer SA will upgrade its E-170 and E-190 jets with new engines and wings by 2018 rather than build a larger, all-new model to take on Boeing Co., Airbus SAS and Bombardier Inc.

Developing “second-generation E-Jets” will cost about $2 billion, cheaper than the $3 billion-plus for a new plane, and may include stretching them to seat as many as 132 people, 10 more than the biggest current aircraft, Paulo Cesar de Souza e Silva, Embraer’s commercial-jet chief, said yesterday.

Embraer’s decision leaves only Bombardier’s CSeries and the C919 from Commercial Aircraft Corp. of China to compete with the smallest versions of Airbus’s A320neo and Boeing’s 737 MAX. The two biggest planemakers have amassed more than 1,600 orders and commitments for the overhauled jets since December, while Bombardier has won 133 contracts in three years.

“Looking at the difficulties the CSeries is facing to penetrate the narrow-body segment, it becomes even more clear that Airbus and Boeing are defending the narrow-body segment very, very, very strongly,” Silva said in an interview. “It’s much more challenging to convince the airlines that are already operating Boeing or Airbus to switch to a new model.”

That removes a “good business case” for Embraer to build a plane bigger than its existing regional jets, he says. The Sao Jose dos Campos, Brazil-based company has the capability to develop a larger aircraft and will reassess if there is “a window of opportunity,” Silva says.

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