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11 March 2010Latin America

 Embraer Bullish on the Brazilian Market

Reproduced from Diário Comércio Indústria - DCI.com.br (March 11, 2010) Fabíola Binas


Luiz Hamilton Lima, Embraer’s Director of Marketing & Sales, Latin America, gives his views on prospects for commercial aviation in his region.


The manufacturer expects aircraft sales to increase in the country in five years. The acceleration of investment in airports, as well as industry decentralization, should boost the company’s business in Latin America.

Confident in the acceleration of the development of the country’s airport infrastructure, particularly in midsize cities, the Brazilian Aeronautics Company (Embraer) expects to increase its stake in Brazilian commercial aviation over the next five years and is seeking to attract new business not only with regional airlines but also with the majors.

“The market as a whole is very promising, including the possibility of the entry of new airlines,” said Luiz Hamilton Lima, director of Embraer’s Latin America commercial aviation division. He added that in the last ten years, Brazil’s domestic sector has been growing at average rates of 11% per year, well above the 4% global average, highlighting that, in this scenario, regional aviation is going to be attractive among new business opportunities.

According to Lima, one of the factors driving the sector’s acceleration is the expansion of the Brazilian middle class which is bringing a new type of passenger to aviation. In addition, the hosting of international events in the next few years like the FIFA World Cup in 2014 and the 2016 Olympics should generate increased investment in airports and promote regional decentralization. Consequently, these factors will trigger an increase in the country’s airline fleet size.

“I have no doubt that this is the best time for Embraer to increase its efforts in Brazil’s commercial airline industry,” he said, and expects that the company will have a significant market share in five years with an impressive fleet of aircraft among airlines flying the skies of the country. “Of course we would like to lead the market with a strong presence. In the future, we’d like to see a large number of Embraer airplanes operating in Brazil.”

The Director of Commercial Aviation said that the company has always been attentive to and present in regional markets around the world and that the reason there wasn’t a larger fleet of his company’s airplanes operating in Brazil in the past was due more to factors related to national fiscal and financial policies. Today, the company continually monitors trends in the commercial market and actions of the major, medium- sized and small airlines, as well as identifying new entrants that can be business prospects for Embraer aircraft.


REGIONAL

Among regional airlines (those that fly aircraft with fewer than 100 seats), Trip Linhas Aéreas (Trip), now operates five Embraer E175s and will take delivery of one more airplane in April. It holds options on 10 more planes. “We hope that these options will become firm orders for Trip,” said the Embraer director.

Another company in the same segment, which operates four ERJ 145s, is Passaredo. “This airline also has significant potential to expand its fleet, possibly with our aircraft,” said Lima, noting that there are new competitors entering the market.

Additionally, some Brazilian regional airlines such as Air Minas, Abaeté, Cruiser, Meta, and Rico operate with older Embraer airplanes, such as the as Bandeirante and Brasília. The renewal of these fleets can generate good sales opportunities. “We have relationships with all these companies and have frequent discussions on possible fleet expansion and renewal,” he said.


OUTSIDE THE COUNTRY

Across Latin America, the commercial aircraft business is on the rise. “Next year we will have the first Embraer jet aircraft flying in Argentina with Austral Líneas Aéreas,” said Lima. His analysis shows that Latin America has shown greater potential for growth than other parts of the world that are still suffering the effects of the recent economic turmoil.

Embraer has sold aircraft to several companies in the region. “Today we have airplanes flying in Mexico with AeroMexico, TACA Airlines from El Salvador, Copa Airlines, Colombia’s AeroRepública and Satena, and Tame in Ecuador,” said the executive who manages the area.

In North America, Embraer’s participation is even greater. To illustrate, in the United States market, one of the most significant in regional aviation, about 67% of sales in the 30 to 90-seat aircraft segment are made by Embraer. For its E-Jets product line, airplanes with 60 to 120-seats, Embraer’s USA market share is approximately 44%.


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  “I HAVE NO DOUBT THAT THIS IS THE BEST TIME FOR EMBRAER TO INCREASE ITS EFFORTS IN BRAZIL’S COM- MERCIAL AIRLINE INDUS- TRY,”

LUIZ HAMILTON LIMA DIRECTOR FOR LATIN AMERICA.






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