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Embraer launches longer-range midsized private jets in turnaround push

Published 2018-10-14, 12:00 p/m
© Reuters.  Embraer launches longer-range midsized private jets in turnaround push
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By Allison Lampert

ORLANDO, Fla. Oct 14 (Reuters) - Embraer SA EMBR3.SA is adding two longer-range business jet variants to its mid-sized Legacy line featuring revamped cabins and technology that reduces turbulence to create smoother flights, the Brazilian plane maker said on Sunday.

The launch of two Praetor models -- named after Ancient Roman officials -- coincides with the business jet industry's flagship show in Orlando from Oct. 16 to 18 and comes as Embraer pursues a broader strategy to revitalize its loss-making executive jet division.

When the Praetor models hit the market in 2019, they will join a fiercely competitive space that includes Bombardier's Challenger 350 BBDb.TO and Gulfstream's G280, along with Textron (NYSE:TXT)'s TXT.N upcoming Cessna Citation Longitude.

Embraer's corporate jet turnaround is important because the company will no longer be able to count on its best performing commercial division if its deal to merge its flagship commercial aircraft arm with Boeing (NYSE:BA) Co. BA.N goes forward. and Boeing announced the $4.75 billion commercial jet alliance in July. If the Brazilian government agrees to cede control of business jets to Boeing, Embraer will be left with two remaining divisions in the red: executive jets and defense.

The Praetor launch comes under the direction of Michael Amalfitano, who took over Embraer's executive jet division in 2017 with a plan to offer customers advanced technologies and luxury features that deliver higher margins.

"The Praetor 500 and Praetor 600 are the disruptive aircraft for the entrepreneur, for the pioneer, for the innovator," Amalfitano said in a statement on Sunday.

The Praetor 500 will be the fastest midsize aircraft in the industry, able to travel from the west coast of the U.S. to Europe with a single stop, Embraer said.

The super-midsized Praetor 600 can fly four well-heeled travelers nonstop between London and New York. On shorter flights the aircraft can carry up to 10 passengers in a business jet category that bridges small corporate planes and large-cabin aircraft for 13 to 19 travelers.

For years, Embraer grew market share by offering hefty discounts on its corporate planes, including the smaller Phenom aircraft.

But Amalfitano has told investors he will avoid discounts in a push to grow margins to the mid-single digit by year-end.

"They are in a transition right now," U.S. aviation analyst Rolland Vincent said of Embraer's business aircraft.

Embraer is expected to hold a steady 16 percent market share for corporate jet deliveries between 2018 and 2027, according to a forecast published before the Praetor launch by aircraft sales and acquisition company Jetcraft.

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