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Embraer Shifts to China Startups to Sell Smallest Jets

11/20/2014| 3:22:58 PM|

With pilots in short supply, the major Chinese airlines have focused on operating full-size planes, according to Guan Dongyuan, the China president for Embraer.

Brazil’s Embraer SA (EMBR3) is shifting its jet-sales strategy in China by targeting startup regional airlines amid resistance from the country’s largest carriers to buying small aircraft.

With pilots in short supply, the major Chinese airlines have focused on operating full-size planes, according to Guan Dongyuan, the China president for Embraer. Now, as the Chinese government prods carriers to serve secondary cities, Embraer has an opening for its regional models, Guan said.

“We want to do business with the major trunk airlines, but regional ones flying routes of 300 people or less a day are a major focus for us,” Guan said yesterday in an interview at the Zhuhai Air Show inGuangdong province. “The major airlines are reluctant to fly the domestic routes where low passenger volumes do not justify the cost of flying their larger aircraft.”

Embraer’s aircraft lineup ranges in capacity from about 70 to 130 seats, in line with demand from smaller markets. Tianjin Airlines Co., which began flying in 2009, is the biggest Chinese customer forSao Jose dos Campos, Brazil-based Embraer, with 75 of the planemaker’s 126 regional jets in operation in the country, Guan said.

The No. 2 Embraer operator is China Southern Airlines Co. (1055), the nation’s biggest airline by passengers carried. The Guangzhou-based carrier has 26 Embraers, Guan said. He said Embraer accounts for 80 percent of the country’s small to medium jet fleet.

China Orders

In July, Embraer signed $2.6 billion of aircraft deals following a meeting between Brazil PresidentDilma Rousseff and Chinese President Xi Jinping. Tianjin Airlines ordered 20 E190 and 20 E190-E2 planes, and ICBC Financial Leasing Co. Ltd. agreed to buy 10 E190-E2 planes.

Embraer’s upgraded E2 lineup features jets with new engines, and the planemaker is targeting the first delivery in 2018. Embraer is investing about $1.7 billion to refresh the E-Jet family and compete against Mitsubishi Aircraft Corp., Sukhoi Co. and Bombardier Inc.

The world’s biggest maker of regional jets also is poised to face competition in China from the country’s first locally developed model in the segment, the ARJ21-700 from Commercial Aircraft Corp. of China.

Comac, as the company is known, reported 23 new commitments for the ARJ21-700 yesterday in Zhuhai.

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TAGS: Embraer | Brazil | regional airlines
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