Embraer bullish on regional jets demand as airlines rethink capacity

Exclusive: Brazilian planemaker sees deal with Boeing finalised by last quarter of 2019

An employee works on a Embraer stand at the Paris International Air Show -- June 14, 2013 -- . (Antoine Antoine for The National) *** Local Caption ***  Paris Air Show009.JPG
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Embraer, the world's third-largest planemaker, is seeing increased interest in regional jets from carriers in the Middle East and Africa as operators re-align their capacity to meet travel demand.

The Brazilian aircraft manufacturer is also boosting efforts to tap growth in Africa, where it sees opportunities to expand as new airlines are being established in the continent, Hussein Dabbas, general manager for special projects in the Middle East and Africa for Embraer commercial aviation, said in an interview in Dubai.

"Definitely airlines now are becoming more familiar with the issue of right-sizing," Mr Dabbas said. "Airlines need to understand that it's not always great to be having big aircraft, it’s great if you can fill them but that’s not always the case, having regional jets is becoming more acceptable.

Middle East carriers posted capacity growth of 4.7 per cent last year and that is expected to drop to 4.1 per cent in 2019, according to the International Air Transport Association. Regional airlines earnings are set to increase by one-third to $800 million this year, IATA predicts.

While the Middle East market generally has a preference for widebody aircraft, Mr Dabbas says there is a strong case for regional jets as airlines rethink their capacity, increase frequencies and connect second-tier city pairs.

Embraer is in discussions with new prospective clients, including "serious contact" with Air Algerie, as well as with existing customers such as Royal Jordanian in a push for regional jet sales in the Middle East and Africa.

Embraer, which has 150 jets in operation in Africa, sees opportunities for regional jet sales to new airlines being established across the continent either independently or through joint ventures.

"Africa is a major destination," Mr Dabbas said. "Growth in Africa is still very small in comparison to what the continent can do so we’re working hard on the African market."

New operators are launching in Zambia, Chad, Mozambique and Gambia. Ethiopian Airlines, Africa's largest carrier, is looking to take stakes in some of the new airlines across the continent as it seeks to consolidate its lead over rivals Kenyan Airlines and South African Airways.

"Africa is a new market for us to a large extent," Mr Dabbas said.  "Sub-saharan Africa is seeing a lot of countries really investing in establishing national airlines and what’s good is they’re establishing them together with other airlines."

Embraer expects its deal with Boeing, where the US planemaker will hold an 80 percent stake in its commercial jets unit, to be complete by the last quarter of 2019, he added.