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Abu Dhabi, UAESaturday 23 March 2019

Embraer expects "stable" growth in Middle East business jets sales

Brazilian planemaker's executive jet unit to benefit from merger with Boeing on commercial planes programme

A Legacy 650E by Embraer at the MEBAA Show in December 2018 at Al Maktoum International Airport in Dubai. Chris Whiteoak / The National. 
A Legacy 650E by Embraer at the MEBAA Show in December 2018 at Al Maktoum International Airport in Dubai. Chris Whiteoak / The National. 

Embraer, which expects to see "fantastic" gains from a $4.75 billion venture with long-term industrial partner Boeing, forecasts its private jets business in the Middle East will remain "stable" next year.

The Brazilian jet-maker is bullish about prospects for its new super-midsized Praetor 600 business jet in the region, where it has secured a sale for the jet and is in talks with more customers, Stephen Friedrich, chief commercial officer of Embraer Executive Jets, told The National. Embraer plans to embark on a demo tour across the Middle East spanning the UAE to Turkey next year to promote its products.

"The forecast for the region is considered to be stable, we don't see any big upticks or downturns," he said in Dubai. "It comes down to economic factors in the region: Oil prices, consumer goods, tourism, financial backing and the property market."

The Middle East contributes a "high" single-digit percentage of Embraer's global private jet sales and ranks as the company's fourth largest market after the US in top position. The Praetor 600 is expected to enter service in the second quarter of 2019 with a price tag of $21 million while the Praetor 500 will be available in the third quarter. The jet has a range of 3,900 nautical miles that allows it to fly non-stop between London and New York or Dubai and Hong Kong.

"We're starting to see more interest in mid-sized cabins in the region, so the Praetor makes sense," Mr Friedrich said. "It's a large cabin at a medium-cabin price so it's a very good match for businesses because its a very cost-effective way to move personnel around."

Among its most popular models in the region are the Legacy 650E, Legacy 500 and the Lineage 1000E.

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The Middle East's stable business outlook for 2019 signifies maturity in the market, where most of Embraer's customers are in non-oil sectors such as real estate, finance and consumer goods, Mr Friedrich said.

With 60 per cent of routes within the Middle East served by less than one flight daily, private jets can fill that gap in the market, he said.

Embraer is seeking to bolster private jet margins as it looks to finalise a joint venture with Boeing covering Embraer's commercial E-jet family, the Brazilian company's most profitable business.

The Sao Jose dos Campos-based manufacturer will remain a separate firm that manufactures private and military jets while reaping a revenue stream from the new partnership with the US planemaker.

Mr Friedrich said Embraer's executive jet unit is set to benefit from the commercial tie-up in terms of finance and supply chain logistics.

"It will be fantastic from a cash-flow standpoint," he said. "We'd go from a net debt to a net cash company, it's very positive for us."

Embraer Executive Jets would also benefit from a "stronger relationship" with suppliers as a result of the Boeing tie-up, he added.

Embraer is not planning on offering discounts for its private jets as it focuses on profitability of the unit, according to Mr Friedrich.

The business jet division registered an operating loss of 32 million reals (Dh30m) for the first nine months of the year, the company said in October.

Established in 1969 by the Brazilian government and privatised in 1994, Embraer is considered the jewel of the Brazilian industry and the source of national pride for the commodities-driven country.

Updated: December 15, 2018 05:05 PM

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