Perspectives on the Year Ahead

Perspectives on the Year Ahead

We recently announced 64 commercial aircraft deliveries for 2023. This is one unit short of our planned 65 to 70 target but it’s still 12% more than 2022. While I’m pleased with the upward trend, our goal is to return to around 90 annual deliveries which we achieved in 2018 and 2019. And although the 2023 revenue was nearly the same as 2019, we’re still only at 70% of pre-pandemic output.

Here is why I’m confident we’ll get back on track in the near term.

Supply Chain

The engine delay issue is being resolved. We’re working with our suppliers to ensure they deliver what we commit to the market. We could have delivered more aircraft but we have to work within the limits of our planning cycle. There’s still room for improvement, particularly with faster shipment of supplies to the production line.

I’m encouraged by the quality of the Pratt & Whitney GTF engines for our E2s now coming out of the factory. They are good to go, with full LLP life and no further need for powder-metal parts inspections. There is a group of older aircraft in the world fleet that will need shop visits but overall, we will be less impacted than other platforms because the E2 had more improvements built-in since it’s EIS. Also keep in mind that the E2s are lighter and don’t generate as much wear and tear on the engines.

2024 Forecast

For 2024, our delivery numbers will be based on what our suppliers can realistically furnish. Our production processes are closely aligned. We’re working with them to grow this year’s output target by double digits. We’re in constant communication with them to make sure we’re on track. I expect to announce the number in the next few weeks.

New E2 Opportunities

No doubt you’ve been following the tremendous performance of the E195-E2 with Canada’s Porter Airlines, which plans to have a fleet of 75 E2s. The company has expanded to the USA with flights to destinations in California and Florida. It will start flying to Las Vegas next month and is eying new service to cities in 8 more states.

Porter gives tremendous visibility to the E2 in the huge USA market. Airlines there are starting to appreciate the range capability of the airplane family, especially the larger E195-E2. The E2 is already generating more conversations with our North American customers but it will take a bit of time to build greater awareness.

One sticking point is the pilot shortage. Fewer available pilots favours interest in bigger narrowbodies, and that creates a gap between those aircraft and the regional fleet. There have been a few soft years but the shortage seems to be resolving itself. That implies that we’ll see more demand for smaller narrowbodies which should fill in that gap. In the meantime, orders for the E175 in the USA remain strong since there isn’t movement on pilot scope clauses.

There are also new opportunities in Asia now that the E190-E2 and E195-E2 are certified in China. The E190-E2’s capacity fits nicely in the middle of the Chinese product line – the ARJ21 at the lower end and the C919 at the top end. Plus, it has excellent hot and high performance since China has many high-altitude airfields. We took the E190-E2 to Lhasa to prove its capabilities in extreme conditions. The E2 is a great aircraft to connect Greater China from west to east, too. We have a lot of customer engagements, but developing the market takes patience.

A new Asian customer will also raise the visibility of the E2 in that region. In a few weeks, we’re delivering the first of 9 E190-E2s to Scoot, a Singapore Airlines subsidiary. Scoot will be a great showcase for flying the aircraft in a low-fare business model.

More Innovations

We rolled out our first E190F passenger-to-freighter conversion last November. We’re finalizing that aircraft right now and expect the first flight by mid-year with certification shortly after. The next step is to work on the larger E195F.

Demand for cargo has softened since we launched our P2F program. But you need to build when the market is a bit slow so you’re ready when demand comes back. There’s so much opportunity for an E-Jet sized freighter, especially with the boom in e-commerce and the need for faster shipments to smaller markets. Until now, there’s no cargo aircraft that fits between an ATR and larger narrowbodies.

People often ask me about the status of our new-generation turboprop. We paused development of the concept in 2022 simply because we didn’t have an engine for it at the time. We still don’t have one so we’ve assigned some of those resources to our Energia program. The focus now is on exploring new propulsion technologies – electric, hybrid-electric, and hydrogen – in the up-to-50 seat segment. Our progress with our Energia initiative may determine how we proceed with a new turboprop.

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