Paris Air Show 2013 Recap

The Paris Air Show 2013 is history – and it wrote (at least a little bit) of aviation history:

Embraer

On the opening day it was Embraer to launch it’s highly anticipated EJet E2 family. Not surprisingly, the E195-E2 will be a stretch of the current E195. Also no surprise that the E170 will not be continued and that the E190-E2 will stay where it is, sizewise. The E175-E2 will be a little bit larger in capacity, stretching it’s fuselage by 0.62m or 24.4inches. The effect is that two more seats can be fitted and in a 1-class 31” layout there are now 88 seats compared to 86 seats in the current E175. This is exactly the figure that Mitsubishi gives for the MRJ90 – any questions? With the same engine as the MRJ will get, the same cabin capacity and a new wing (even larger now than the MRJ wing) the fuel efficiency of the two aircraft should be very close to each other. The MTOW of the E175-E2 is a little bit higher (44.33 t vs. 42.8t), but the Embraer has more range, too (1920nm vs. 1780nm).

Embraer could feel the heat...

Last week's Farnborough Airshow yielded not many surprises - maybe the surprise was that mayn anticipated orders did not happen.

• Boeing does not have 1000 firm orders (or more) for the B737MAX (but Airbus did not either after the Paris Air Show last year.
• There was no VLA order from Turkish Airlines (nor from any other).
• There was no order for the A320neo or the B737MAX from Pegasus. Apparently Boeing trying all they can to keep Pegasus in the Boeing camp...
• There was also no order from Aeromexico - but all points to an order for Seattle/Chicago here...

But wait - there was one order that was remarkable and that could mark the beginning of a shift in the regional aircraft market. Although this order was not quite a real - firm - order. But the "agreement in principle" between Skywest and MITAC shows that the MRJ gains some confidence in the marketplace despite the recent announced delay in the development schedule and subsequently the EIS.

A few days before Embraer announced their statistics for the second quarter of 2012. backlog is now at a 6 year low for the EJet Family. It fell from 476 aircraft at the end of 2007 to 200 at the end of the second quarter. There are a lot of options, but if these ever get firmed up is not a safe bet.
Embraer shares took a hot following the release of the backlog and analysts called the airshow to be "dismal" for Embraer.
Well, that may be a little bit overstated, as Embraer got a lot of orders at the last airshows, including orders from ALC and GECAS that showed confidence in the EJet Family also from the leasing community.

But in fact Embraer could feel a little bit pressure now to react. The 50 seater replacement cycle in the U.S. regional market just has begun. The MRJ won two rounds, at Trans States and now at Skywest. The direct competitor to the MRJ90 is the E175, but according to todays planning the E190 would get the reengining first. On the other hand Embraer recently announced that there would be an "aerodynamic cleaning up" including new winglets in the works for all the EJet family members that results in a 5% lower fuel burn for the E170 and E175. This could give Embraer some breathing room, but I doubt that this is enough to cope with the brand new design (aircraft & engine) of the MRJ.
Embraer currently plans with an EIS of the E190G2 in 2018, probably meaning that the E175G2 could come in 2019. It remains to be seen if Embraer now speeds up their plans, despite saying that the Skywest order does not change their strategy.