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JayinKitsap
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 4:17 am

smithbs wrote:
EMBSPBR wrote:
smithbs wrote:
https://seekingalpha.com/article/434344 ... -collapses
"there was an argument for low cost engineering resources in Brazil. However, that is not quantified in the article and my suspicion is that while engineering costs may be lower in Brazil, it might not be by much (and could easily be lost through the usual mismanagement foibles of a merger/jv)."


Boeing has more to loose than pay what was previously agreed and that due COVID-19 worth less now.
From the same source, is clear that in long term they will lose more just than the money that could be invest in the JV:

Excerpts:

"So, low-cost engineering is not necessarily a bad thing and if we look at Embraer's expertise,
I do think that you can say that Brasil has a very strong competent engineering core that is relatively cheap for a company like Boeing.
It would have helped Boeing in improving the business cases for new jet developments."


"Boeing would have gotten a peek in the kitchen of how Embraer makes their design decisions with insight in flight-control technology,
aerodynamic technology, landing gear technology, and weight management.
Those are all factors that could help Boeing, even though they have a very capable engineering core themselves."


"On top of the engineering resources and technology, we have the product itself. With a stake in the joint-venture, Boeing would have had a product in the sub-150-seat segment to offer, where it had nothing to offer to customers previously. On top of that, Boeing would also reap the rewards of services contracts for the installed base which fits the company's services strategy. So, the strategic importance of the joint venture is more than clear."

However, from my point of view, it was easier for Boeing to "pull the plug" instead of sitting down and trying to renegotiate the JV in the long term and in better conditions for both them and Embraer.

So, in the post-Covid-19 medium term, Boeing will continue to be the same slow, arrogant and lazy pachyderm that once dominated the industry ...


Maybe the points have some validity, but to us spectators they still have not been quantified. Is there really a deal to be had with low cost engineering, or is it mostly illusion? Does Boeing have something to learn from Embraer, or not much worth paying for? I'm not seeing anybody posting numbers, just opinion. The only quantifiable argument is the value of the E2 series, which evidently is worth a fair bit less than $4.2 B.


I suspect that in Feb 19, Embraer looked quite attractive to Boeing, Boeing was flush with profits, had good revenue, the MAX was ramping up, and the C-Series as well as the E2 series both seemed formidable. Fast forward to Jan 20, the MAX was grounded with profits sinking down a black hole, orders were slowing quickly but Embraer still looked quite good, maybe a 10% loss of value, nothing to quibble about. But with the bottom dropping out in March 20 this JV suddenly looked like a disaster of an imvestment, getting any bailout money would look bad, as they were buying. Embraer was not a candidate for bailout with Boeing there, but are now elegible.

Embraer is worth far below $ 2B now, not 4.1B for 80% so it was time to part. Somewhere down the road who knows.
 
bkmbr
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 5:18 am

JayinKitsap wrote:
Embraer is worth far below $ 2B now, not 4.1B for 80% so it was time to part. Somewhere down the road who knows.


But then we are going into a problem of discussing contractual clauses? If Boeing did not put in the contract some form of "trigger" that would allow renegotiating the values ​​if something out of the ordinary happened (like a pandemic) then it is a mistake on their part and the Embraer would have to be compensated for the breach of the contract, not only for the expenses it already had in preparing for the continuation of the agreement that was canceled, but also a contractual fine for breach of commercial clauses.
According to some news that came out in Brazil last week in the contract signed in January 2019 by both, a series of restrictions were created to allow or not to breach the agreement and expressly stipulating ten conditions that would not qualify as reasons for the cancellation of the agreement, conditions as a pandemic and crisis in the global economy. For this reason, Boeing's generic argument that it canceled the contract due to contractual failures by Embraer in order to escape a poorly drafted contract.
Anyway, we will have to wait for the outcome of the arbitration because I suspect that we will never have access to this contract to know exactly the terms agreed between the companies.
 
Sokes
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 6:06 am

Korea has good engineers. How much would the Korean government have to spend to build an industry with the size and capability of Embraer?
I doubt it's only two or even five billion $.
If I had to be a Brasilian politician, I would arm twist Embraer to sell the E2 to Airbus for 1 Euro. Airbus doesn't have a 4 abreast plane yet.

If Boeing can satisfy the contract by paying 100 million $, what drama does the management do? What are business customers and suppliers going to think?


T4thH wrote:
What I really hate regarding this whole story, is, that with end of the joint venture also the discussed turboprop by Embraer Brazil has gone to the maker.
This will now leave the ATR42/72 family globally without a real competitor. ...
ATR is an Airbus/Leonardo joint venture, where Airbus has 50 % share. Airbus has already stated, as there is no competitor, there is no need to upgrade the ATR42/72 family (Leonardo is interested in an upgrade and a new development).

I consider the ATR too shaky. IIRC the Q400 has too high operating costs. I very much hope Embraer will still build it.
Why can't the world be a little bit more autistic?
 
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NameOmitted
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 7:14 am

How much is actually needed here? They have the engineering credibility: I've not read anyone stating that they are making bad aircraft, just bad decisions regarding scope.

Do they need an aviation partner, or do they simply need a financial partner? If it's the latter, then a lot more options are open then just the Chinese.

Post Brexit English money looking to avoid Europe? Indian money looking for access to the aviation sector?

Longview Aviation Capitol looking to make this website explode?
 
airhansa
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 11:09 am

Any aviation partner is going to wind down operations in Brazil. Any country in the East, saving Japan, doesn't need most of the workers in Brazil. So Brazil would ideally like a financial partner.
 
T4thH
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 11:17 am

NameOmitted wrote:
How much is actually needed here? They have the engineering credibility: I've not read anyone stating that they are making bad aircraft, just bad decisions regarding scope.

Do they need an aviation partner, or do they simply need a financial partner? If it's the latter, then a lot more options are open then just the Chinese.

Post Brexit English money looking to avoid Europe? Indian money looking for access to the aviation sector?

Longview Aviation Capitol looking to make this website explode?


What airlines will need in the post coronavirus time will be a form of safety. They have to be sure, that Embraer will no collapse and disappear, that the support network will not extinct, that the ordered birds did not end with an orphan status, so no one is willed to support with spare parts e.g., because there are to few available e.g.
As airline, will you order any planes from Embraer, when you have to fear with a let us say 50/50 chance, that Embraer will collapse, you will loose your prepaid money. will end up with two or three orphan birds of an order of 20 or so e.g.? Just remind, the A220 order numbers went up, as soon as Airbus has bought the A220 program from Bombardier.
The E2 family is good, but....E175E2 does not fit to the scope clauses, so it will stay orphan in best case, if ever sold. The E190E2 and E195E2 are good planes, but the A220 is better...
The E1 family is getting old.
Embraer commercial has now a really big problem, the products do not either fulfill the scope clauses (and in the next 20 years, 2/3 of the 50 to 100 PAX regional market of around estimated 2400 jets (jets not turboprops!!!) will be the US market. Or they have a competitor, which is just a little bit superior, the A220 and additional, the A220 is now an Airbus, so a save and strong competitor, which airlines can and will trust!
 
inkjet7
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 12:20 pm

kaneporta1 wrote:

Actually, Delta buying almost 100 of them does make it a success. But my comment had nothing to do with this. I was mentioning that the entire Delta A220 fleet is NOT currently grounded. And this says a lot about the economics of this aircraft and whether it's a "maintenance dog" as was claimed.


I'm not sure what that means. KLM has operated 48 out of 49 Embraers in seven days, and only 7 out of 52 B737's. I think it only means very few customers.
 
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lightsaber
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 2:47 pm

NameOmitted wrote:
How much is actually needed here? They have the engineering credibility: I've not read anyone stating that they are making bad aircraft, just bad decisions regarding scope.

Do they need an aviation partner, or do they simply need a financial partner? If it's the latter, then a lot more options are open then just the Chinese.

Embraer must cut costs. They are great at designing aircraft, but not good at grabbing large markets. Everything from Rivets to tires they could buy cheaper with an aviation partner, with Boeing the extreme option. I do not understand why Embraer didn't tack like Mitsubishi to create a scope compliant 76 seater (undo the 5m wingspan extension and body stretch).

I also don't understand why Embraer kept doubling down in business jets below the size really selling. Only the 300 has volume. This is an industry built on volume (it is why so many business jets use borrowed subsystems, E.g., Cessna Latitude with sovereign tail, engines & nacelles or Longitude with stretched Latitude and Hawker 400 wing.

https://gama.aero/facts-and-statistics/ ... y-outlook/

This will be settled by the courts. If Boeing has an out, they will take it. $4.2 billion for ERJ now worth $943 million (total) would be insane. The stock was over $20 per share, now $5.07. If Boeing didn't need money desperately, I'm sure they would pay $1 billion or $1.2 B for 80%, not $4.2 billion. The little clauses will matter. Unfair? Maybe. But Boeing needs to look after itself.

The value of Embraer is about 40 E2 jets...

Lightsaber
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bkmbr
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 6:19 pm

Sokes wrote:
If I had to be a Brasilian politician, I would arm twist Embraer to sell the E2 to Airbus for 1 Euro. Airbus doesn't have a 4 abreast plane yet.


With the A220 Airbus would never get the regulatory approval to this kind of operation anywhere in the World.
 
oldJoe
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 6:27 pm

They are great at designing aircraft, but not good at grabbing large markets

Is Boeing not exactly the opposite with the Max ? Bad design and grabbing large markets ? How this will sort out is another question.
I don`t think China is at all interested to invest into Embraer. The will copy and paste until they have the final solution.
 
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Polot
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 6:48 pm

bkmbr wrote:
Sokes wrote:
If I had to be a Brasilian politician, I would arm twist Embraer to sell the E2 to Airbus for 1 Euro. Airbus doesn't have a 4 abreast plane yet.


With the A220 Airbus would never get the regulatory approval to this kind of operation anywhere in the World.

It’s also a terrible deal for Embraer/Brazil. Things are not so bad that they need to get rid of the program immediately for a euro.

It’s not just the A220 that would cause issues, Airbus’s stake in ATR probably would too. With the CRJ basically dead, the Q400 on life support, and Mistubishi struggling for traction you are basically ceding the entire regional market to Airbus. That will never pass muster.
 
Sokes
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 6:58 pm

bkmbr wrote:
Sokes wrote:
If I had to be a Brasilian politician, I would arm twist Embraer to sell the E2 to Airbus for 1 Euro. Airbus doesn't have a 4 abreast plane yet.


With the A220 Airbus would never get the regulatory approval to this kind of operation anywhere in the World.

The world is a big place. But yes, there would be opposition.
On the other side why would agencies concerned about monopolies oppose the takeover of a plane that nobody wants? If there is no other investor and the alternative is the end of the program, what should concerned agency decide?
Why can't the world be a little bit more autistic?
 
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Polot
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 7:33 pm

Sokes wrote:
bkmbr wrote:
Sokes wrote:
If I had to be a Brasilian politician, I would arm twist Embraer to sell the E2 to Airbus for 1 Euro. Airbus doesn't have a 4 abreast plane yet.


With the A220 Airbus would never get the regulatory approval to this kind of operation anywhere in the World.

The world is a big place.

With some countries more important than others. Nobody cares if Mozambique approves or disapproves. But if, for example, the US antitrust watchdog disapproves (and they probably would) and Airbus ignores them and goes ahead without their approval then instead of the E2 costing Airbus 1 euro they will quickly find that it is going to cost them several billion dollars in fines/penalties/lost contracts.

Zero of which would go to Brazil/Embraer.
 
strfyr51
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 7:50 pm

bkmbr wrote:
EMBSPBR wrote:
Source:
https://airinsight.com/traicao/

Good reading to everyone ...

they seemed
Were China to do a deal with Embraer, it would gain several things – access to experienced engineers, a team that has certified several aircraft, access to a world-class support network, relationships with airlines worldwide, and instant market credibility. We expect to hear howls of protest from the United States and the European Union were China and Brazil to start talking openly. If Embraer tied up with China, Airbus would see a smaller market for its A220. And Boeing would be frozen out of the sub-150 seat market. That hurts Airbus, but it hurts Boeing even more. Traição always comes at a high price.


Basically is what I was saying. Embraer should be a great deal for COMAC and the biggest nightmare for Airbus and Boeing.

COMAC would be an "Also Ran" next to Boeing and Airbus Even Combined with Embraer. Since Embraer didn't bother to check their Market in the USA before launching the E2 series, when they KNEW good and well what the ALPA contracts looked like in the USA? I cannot help but question their Business acumen especially since they were selling E170's and E175's all over the place in the USA. Did they suddenly expect the majors to turn away from Boeing and Airbus to them?
So exactly Who followed USAIR with the E190/195 order for mainline service with their airplanes in is to themselveshe USA? Nobody I can recall. their E-170 and 175 appear to be doing well. But they seemed to ignore what they were doing in the E2 in making the weight beyond what the ALPA contract stated knowing good and Well the Pilot union was watching them and the US Majors like a hawk! United went all the way to China to find A319's to Not buy the E-195. Why? Because in buying the E-195? the UA-ALPA crews would have then extrapolated the E-195 down to the smaller models and then demanded to fly them ALL!
Delta had the right Idea with their A220's, It remains to be seen what their pilots might want from them. Embraer is in this fix because they did this to themselves!
they exceeded the weight limits and they miscalculated their overall impact on the US Market in light of US-ALPA's contract provisions. So?
they now have NO Choice but to .go "head up" with Boeing and Airbus. Can they? Surely. But what are they willing to Lose if they fail? OR?
What price are they willing to Risk in prompting an ALPA strike? Because that's what it will take for them to have their way.. Could be?
Embraer might want to match the A220 "stride for stride" with another Model and designation.
 
bkmbr
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 8:42 pm

Sokes wrote:
bkmbr wrote:
Sokes wrote:
If I had to be a Brasilian politician, I would arm twist Embraer to sell the E2 to Airbus for 1 Euro. Airbus doesn't have a 4 abreast plane yet.


With the A220 Airbus would never get the regulatory approval to this kind of operation anywhere in the World.

The world is a big place. But yes, there would be opposition.
On the other side why would agencies concerned about monopolies oppose the takeover of a plane that nobody wants? If there is no other investor and the alternative is the end of the program, what should concerned agency decide?


The agencies concerned about monopolies will oppose because Airbus would be a virtual worldwide monopoly in regional jets market. Not gonna happen and this have nothing to do with politics. The ERJ+A220 together represents easily more than 85% of all RJ market in the planet.
 
bkmbr
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 08, 2020 8:50 pm

strfyr51 wrote:
COMAC would be an "Also Ran" next to Boeing and Airbus Even Combined with Embraer. Since Embraer didn't bother to check their Market in the USA before launching the E2 series, when they KNEW good and well what the ALPA contracts looked like in the USA? I cannot help but question their Business acumen especially since they were selling E170's and E175's all over the place in the USA. Did they suddenly expect the majors to turn away from Boeing and Airbus to them?
So exactly Who followed USAIR with the E190/195 order for mainline service with their airplanes in is to themselveshe USA? Nobody I can recall. their E-170 and 175 appear to be doing well. But they seemed to ignore what they were doing in the E2 in making the weight beyond what the ALPA contract stated knowing good and Well the Pilot union was watching them and the US Majors like a hawk! United went all the way to China to find A319's to Not buy the E-195. Why? Because in buying the E-195? the UA-ALPA crews would have then extrapolated the E-195 down to the smaller models and then demanded to fly them ALL!
Delta had the right Idea with their A220's, It remains to be seen what their pilots might want from them. Embraer is in this fix because they did this to themselves!
they exceeded the weight limits and they miscalculated their overall impact on the US Market in light of US-ALPA's contract provisions. So?
they now have NO Choice but to .go "head up" with Boeing and Airbus. Can they? Surely. But what are they willing to Lose if they fail? OR?
What price are they willing to Risk in prompting an ALPA strike? Because that's what it will take for them to have their way.. Could be?
Embraer might want to match the A220 "stride for stride" with another Model and designation.



Embraer bet that the scope clause would be changed eventually and, let's be honest, there are still possibilities for it to be changed in the reorganization that the market will face after the Covid crisis. If they change the clauses the M100 dies before arriving and the 175E2 will be ready to be sold to anyone who wants to. The Boeing partnership would help a lot in the lobbying necessary to chance the scope clauses that have been altered before do increase the limits of the scope clause.
 
Sokes
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Sat May 09, 2020 1:49 am

Polot wrote:
Sokes wrote:
bkmbr wrote:

With the A220 Airbus would never get the regulatory approval to this kind of operation anywhere in the World.

The world is a big place.

With some countries more important than others. Nobody cares if Mozambique approves or disapproves. But if, for example, the US antitrust watchdog disapproves (and they probably would) and Airbus ignores them and goes ahead without their approval then instead of the E2 costing Airbus 1 euro they will quickly find that it is going to cost them several billion dollars in fines/penalties/lost contracts.

Zero of which would go to Brazil/Embraer.

You are 100% right even if the antitrust watchdog approves. And that's Embraer's dilemma.
Considering that the US is the big market for regional jets and considering the US reaction after the C-Series take over nobody will be willing to invest in Embraer.
Boeing knows this. Moreover Boeing has enough influence to get any investor (other than itself) into trouble. All potential investors know this.

What happened to the WHO ruling concerning US subsidies for Boeing. Wasn't the WTO supposed to give the final ruling in January this year?
https://marketrealist.com/2019/10/airli ... -eu-goods/
Why can't the world be a little bit more autistic?
 
CFRPwingALbody
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Sat May 09, 2020 4:35 pm

I think Embraer can very nicely survive on it's own. Their E175(E1) is still the best option for the scope compliant US market. The E175 is currently the only regional jet in production.
It will take until 2022 before the M100 becomes available.
The E190E2 and E195E2 are good succesors for the E190 and E195. I expect more airlines will order them, once engine reliability is higher.
I think the E175E2 won't get orders. Embraer has two options.
1) An E185 with PW19xx engines. For airlines operating E2 planes I think engine commonality will be more important.
2) Shrink the E175E2 so it will become scope complient.
1 is less expensive, but 2 has much higher sale potential.

I think Embraer and Boeing (initially) wanted the murger to strenghten the position of the E-jets. Bombardier needed Airbus to take over the CSeries/A220 for the program to survive.
I think this difference is why the EU hasn't given permision for the Embraer/Boeing murger.
Side note; Airbus and Leonardo are investing with R&D project in their regional/military prop offering. The ATR42-600s didn't came out of the blue. I expect the launch of a -700 series around 2025.
 
Sokes
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Sun May 10, 2020 6:45 am

CFRPwingALbody wrote:
Side note; Airbus and Leonardo are investing with R&D project in their regional/military prop offering. The ATR42-600s didn't came out of the blue. I expect the launch of a -700 series around 2025.

Can you expand?
Why can't the world be a little bit more autistic?
 
bkmbr
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Sun May 10, 2020 6:11 pm

Airbus, Dassault Aviation and Leonardo are also working at the European Medium-Altitude Long-Endurance Remotely Piloted Aircraft (MALE RPAS), the EU's equivalent version of a supersized MQ-9 Reaper.
 
bkmbr
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Sun May 10, 2020 6:14 pm

CFRPwingALbody wrote:
2) Shrink the E175E2 so it will become scope complient.
1 is less expensive, but 2 has much higher sale potential.


You just described what a ERJ-170E2 would be.
 
Nean1
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 12:36 pm

bkmbr wrote:
Sokes wrote:
If I had to be a Brasilian politician, I would arm twist Embraer to sell the E2 to Airbus for 1 Euro. Airbus doesn't have a 4 abreast plane yet.


With the A220 Airbus would never get the regulatory approval to this kind of operation anywhere in the World.


I have a better proposal, since the EU, China, USA, Canada and Russia virtually guarantee billionaire aid to their aeronautical industries with impunity. What if the Brazilian government provided Embraer with USD 3 billion to design aircraft comparable to the A320/321? From the technology and components of the E2 / KC390 I understand that in 5 years we would have something very competitive. Have you ever thought about it, after all 3 billion USD seems very little money these days.

The $ 4.2 billion that Boeing promised would never have seemed such good bargain. After all, winning a competitor capable of delivering on budget and exceeding promises is is not encouraging news.
 
bkmbr
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 1:23 pm

Nean1 wrote:
I have a better proposal, since the EU, China, USA, Canada and Russia virtually guarantee billionaire aid to their aeronautical industries with impunity. What if the Brazilian government provided Embraer with USD 3 billion to design aircraft comparable to the A320/321? From the technology and components of the E2 / KC390 I understand that in 5 years we would have something very competitive. Have you ever thought about it, after all 3 billion USD seems very little money these days.

The $ 4.2 billion that Boeing promised would never have seemed such good bargain. After all, winning a competitor capable of delivering on budget and exceeding promises is is not encouraging news.


Brazil is in the middle of a political and economical colapse right now, the President it is in the process of being removed from office thanks to a denunciation by its former minister of justice that he was trying to protect 3 of their 4 children from corruption investigations, Covid is killing nearly a thousand people a day and the economy is on the verge of collapse. Even if it was in the government's interest to do such a maneuver, he would probably have trouble securing that amount of money at this point.
Last edited by bkmbr on Wed May 13, 2020 1:36 pm, edited 1 time in total.
 
Nean1
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 1:32 pm

bkmbr wrote:
Nean1 wrote:
I have a better proposal, since the EU, China, USA, Canada and Russia virtually guarantee billionaire aid to their aeronautical industries with impunity. What if the Brazilian government provided Embraer with USD 3 billion to design aircraft comparable to the A320/321? From the technology and components of the E2 / KC390 I understand that in 5 years we would have something very competitive. Have you ever thought about it, after all 3 billion USD seems very little money these days.

The $ 4.2 billion that Boeing promised would never have seemed such good bargain. After all, winning a competitor capable of delivering on budget and exceeding promises is is not encouraging news.


Brazil is in the middle of a political and economical colapse right now, the President it is in the process of being removed from power thanks to a denunciation by its former minister of justice that he was trying to protect 3 of their 4 children from corruption investigations, Covid is killing nearly a thousand people a day and the economy is on the verge of collapse. Even if it was in the government's interest to do such a maneuver, he would probably have trouble securing that amount of money at this point.


You must know that the minister who made such a report has failed to prove it and is himself being accused of the false report. Please return to the topic, I have no interest in your political position and motivators.
 
bkmbr
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 1:43 pm

Even if Embraer had the money to enter in such a project (which the company doesn't have) I don't see Embraer doing this right now because that kind of thing they would do. Embraer has always been successful in entering market niches where it would have a competitive advantage (the cases of the EMB-120, ERJ-145 and more recently the E-Jet family). This would not be the case for it to enter the most competitive segment of the market where it has 2 consolidated players (A320 and 737) and 2 more players with the potential to have strong products (MC-21 and C-919). A turboprop to compete head-on with the ATR would be already a very bold thing on the part of Embraer due to the dominance of ATR in that market, facing Airbus and Boeing head on without having something that represents a significant competitive advantage would be practically suicide.
 
Sokes
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 1:45 pm

Nean1 wrote:
bkmbr wrote:
Sokes wrote:
If I had to be a Brasilian politician, I would arm twist Embraer to sell the E2 to Airbus for 1 Euro. Airbus doesn't have a 4 abreast plane yet.


With the A220 Airbus would never get the regulatory approval to this kind of operation anywhere in the World.


I have a better proposal, since the EU, China, USA, Canada and Russia virtually guarantee billionaire aid to their aeronautical industries with impunity. What if the Brazilian government provided Embraer with USD 3 billion to design aircraft comparable to the A320/321? From the technology and components of the E2 / KC390 I understand that in 5 years we would have something very competitive. Have you ever thought about it, after all 3 billion USD seems very little money these days.

The $ 4.2 billion that Boeing promised would never have seemed such good bargain. After all, winning a competitor capable of delivering on budget and exceeding promises is is not encouraging news.

I don't know why nobody likes to buy the E2. Is it engine reliability concern? Is it concern about the ability of Embraer to survive and provide service for 30 years?
The Embraer web page is working, but the investors portal "took too long to respond". That's not a good sign.
Probably you are right and a bigger company with another civilian plane would help. However I believe rather 8 billion $ would be required. And I think they should aim for an A321/ B757 size plane.
In exchange Brasil could demand two things. A) that Embraer has to pay back and b) that Embraer has to forever reinvest 70% of profits.

I am surprised Brasil plays in this league. In my opinion it would be stupid of the government not to help when other governments do.

Even better: Let Embraer get bankrupt. Let the government take over. The government can pay some of the liabilities, maybe five billion $ or so. I can't judge as I can't access their financial report. After that issue 10 billion $ new shares. Whatever private investors want to buy, let them buy. If demand is less, the company sells for less. If any investor is willing to pay more than 10 billion $ it can be sold to the highest bidder. However former investors of Embraer or family members mustn't be allowed to buy shares/ bid for the company. That's something from India's new insolvency code. It's meant to prevent that owners extract wealth only to be the highest bidder after banks took a hair cut.

Five billion $ tax money should make sure Brasil's aviation industry is safe and give confidence to airlines. It is fair to everybody, including foreign investors.
It's not a help for already existing investors. There is no "privatize profits, socialize losses" in this proposal.
The only question is if it's fair to competitors? I assume Airbus and Boeing prefer help less harsh to the owners. So I doubt they would complain. Though with Boeing such a believe is probably naive.
Why can't the world be a little bit more autistic?
 
bkmbr
Posts: 262
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 1:53 pm

Most of the Embraer shares are owned by a Brazilian consortium between the Bonzano group and 2 major pension funds
Image
Let Embraer get bankrupt is not an acceptable political option in Brazil right now.
 
Nean1
Posts: 379
Joined: Mon May 30, 2016 11:08 pm

Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 2:25 pm

Sokes wrote:
Nean1 wrote:
bkmbr wrote:

With the A220 Airbus would never get the regulatory approval to this kind of operation anywhere in the World.


I have a better proposal, since the EU, China, USA, Canada and Russia virtually guarantee billionaire aid to their aeronautical industries with impunity. What if the Brazilian government provided Embraer with USD 3 billion to design aircraft comparable to the A320/321? From the technology and components of the E2 / KC390 I understand that in 5 years we would have something very competitive. Have you ever thought about it, after all 3 billion USD seems very little money these days.

The $ 4.2 billion that Boeing promised would never have seemed such good bargain. After all, winning a competitor capable of delivering on budget and exceeding promises is is not encouraging news.

I don't know why nobody likes to buy the E2. Is it engine reliability concern? Is it concern about the ability of Embraer to survive and provide service for 30 years?
The Embraer web page is working, but the investors portal "took too long to respond". That's not a good sign.
Probably you are right and a bigger company with another civilian plane would help. However I believe rather 8 billion $ would be required. And I think they should aim for an A321/ B757 size plane.
In exchange Brasil could demand two things. A) that Embraer has to pay back and b) that Embraer has to forever reinvest 70% of profits.

I am surprised Brasil plays in this league. In my opinion it would be stupid of the government not to help when other governments do.

Even better: Let Embraer get bankrupt. Let the government take over. The government can pay some of the liabilities, maybe five billion $ or so. I can't judge as I can't access their financial report. After that issue 10 billion $ new shares. Whatever private investors want to buy, let them buy. If demand is less, the company sells for less. If any investor is willing to pay more than 10 billion $ it can be sold to the highest bidder. However former investors of Embraer or family members mustn't be allowed to buy shares/ bid for the company. That's something from India's new insolvency code. It's meant to prevent that owners extract wealth only to be the highest bidder after banks took a hair cut.

Five billion $ tax money should make sure Brasil's aviation industry is safe and give confidence to airlines. It is fair to everybody, including foreign investors.
It's not a help for already existing investors. There is no "privatize profits, socialize losses" in this proposal.
The only question is if it's fair to competitors? I assume Airbus and Boeing prefer help less harsh to the owners. So I doubt they would complain. Though with Boeing such a believe is probably naive.


The equation is surprisingly simple. Among the requirements to be a competitive producer in the aeronautical industry, the money element is the EASIEST to obtain. Much more than technical competence, credibility and managerial discipline. No major nation will let its main industry perish in this crisis. As for timming, crises like this are terrible to produce things but good for developing products.

If is it fair to the competitors? I think it's the kind of fairness we learn from Airbus, EU, Boeing, Japan, China, Russia, Canada and Bombardier ...
 
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EMBSPBR
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 2:35 pm

[threeid][/threeid]
bkmbr wrote:
Most of the Embraer shares are owned by a Brazilian consortium between the Bonzano group and 2 major pension funds
Image


Your data is out f date:

Image
 
User avatar
EMBSPBR
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 2:36 pm

bkmbr wrote:
Let Embraer get bankrupt is not an acceptable political option in Brazil right now.


It is useless to say: people here think that Embraer is just E-Jets.
Just let it be ...
 
bkmbr
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 3:00 pm

WayexTDI wrote:
Except your proposal was 100% political; so, either you brings politics into the discussion or you don't.


To support or not the company through government loans is a political decision anywhere in the world. The fate of Boeing, Airbus, Embraer, Bombardier, COMAC and many other are intrinsically linked to the political situation in the company's home country, or do you think the american government is going to bailout Boeing because of the beautiful eyes of the Boeing's CEO?
 
VV
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 3:41 pm

Isn't Embraer trying to raise about US$ 1.5 of cash through debts after the joint-venture plan collapsed?

Initially Boeing would have given US$ 4.2 billion, of which Embraer would have given 1.9 billion to shareholders as dividends.
So the cash need for the commercial aircraft division is only about US$ 2 billion.

Embraer has business jet division and defense plus other small stuff.
If they manage to raise the 1.5 billion or so of cash (through debts), I think it should be okay to go through this crisis.

I think they still have 181 E175 (E1) in the backlog, so that's about US$ 3 billion of sales or about US$ 1 billion revenue when they will have delivered them all.

You can add the business jet deliveries too.

It is clear it would have been much easier if the deal with Boeing had happened, but life is life.
They will manage to get through this well.
 
T4thH
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 4:45 pm

Sokes wrote:
CFRPwingALbody wrote:
Side note; Airbus and Leonardo are investing with R&D project in their regional/military prop offering. The ATR42-600s didn't came out of the blue. I expect the launch of a -700 series around 2025.

Can you expand?


Sorry, but no. Leonardo is interested in an upgrade of the ART family but Airbus has said "no" and this was already prior Covid 19.
There is no competitor left, so why shall they /Airbus been willed to spend/waste billions for a development of a new plane? There is only one turboprop product left (the ATR) in the 50 to 70 market. And why shall PW construct a new generation of engines? There is only the PW 100 family available, there is no competitor. And yes, why shall they?

Embraer has recently cancelled the turboprop project, as Boeing has ceased the fusion.

The Q400 is getting old and more worse, more than 100x Q400 have been thrown on the market with last regional airlines, who have collapsed during Coronavirus pandemic, like FlyBe and others (or like AirBaltic, who will restart as 100% A220-300 airline). Alone for Flybe these have been 54 Q400 + 6 inactive and many/most of them young to mid age. AirBaltic: 12x with an average age less then 10 years. There is no need to buy new build ones.

Russia: New build turboprops (like IL114) for the civil market...few low dozens in total in the last 20 or 30 years.
China: MA60, 110 delivered in last 15 years, of them many given as gift to different airlines in Africa, Pacific or Asia, more than half are parked and the MA60 has an awful reputation and an awful incident rate.
MA600, 16x in 10 years have been delivered....
MA700: years behind schedule. Half a year ago, they have started wit the assembly of the first prototype. Will be sold only to China government owned airlines in China and some companies for business purposes. All international airlines, who have ordered them...have all ceased operation.
 
Sokes
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 5:50 pm

EMBSPBR wrote:
[threeid][/threeid]
bkmbr wrote:
Most of the Embraer shares are owned by a Brazilian consortium between the Bonzano group and 2 major pension funds
Image


Your data is out f date:

Image

Good info. But to appreciate other people's effort quoting the source would be nice.
Why can't the world be a little bit more autistic?
 
bkmbr
Posts: 262
Joined: Fri Apr 24, 2020 2:27 am

Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 6:02 pm

Sokes wrote:
Good info. But to appreciate other people's effort quoting the source would be nice.


This information is available at Embraer's own Investor Relationship website

Embraer's Capital Ownership
Embraer Fifth Annual Investor Meeting Financial Presentation (Slide #4 to be more specific)

This is all public information available at the company's website so I didn’t imagine that putting the source of the data was so important for the discussion since it is publicly available information.
 
VV
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Wed May 13, 2020 8:11 pm

T4thH wrote:
...
There is no competitor left, so why shall they /Airbus been willed to spend/waste billions for a development of a new plane? There is only one turboprop product left (the ATR) in the 50 to 70 market. And why shall PW construct a new generation of engines? There is only the PW 100 family available, there is no competitor. And yes, why shall they?

Embraer has recently cancelled the turboprop project, as Boeing has ceased the fusion.
...



Correct.

There is absolutely no need to develop a better ATR.

Dash 8 Q400 is not a competition. It is overpowered and more expensive to operate than ATR.
In addition, deHavilland of Canada does not have the mean to market the Dash 8 Q400 properly.
Their sales and marketing team comes from Bombardier, the same team that failed to sell Q400, CRJ and C Series. Why should it change now?
 
Sokes
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 1:52 am

VV wrote:


Correct.

There is absolutely no need to develop a better ATR.

Dash 8 Q400 is not a competition. It is overpowered and more expensive to operate than ATR.

That's what is always said. But I find ATR is under-powered.
How do the two planes compare in maintenance?
Why can't the world be a little bit more autistic?
 
strfyr51
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 2:50 am

bkmbr wrote:
strfyr51 wrote:
COMAC would be an "Also Ran" next to Boeing and Airbus Even Combined with Embraer. Since Embraer didn't bother to check their Market in the USA before launching the E2 series, when they KNEW good and well what the ALPA contracts looked like in the USA? I cannot help but question their Business acumen especially since they were selling E170's and E175's all over the place in the USA. Did they suddenly expect the majors to turn away from Boeing and Airbus to them?
So exactly Who followed USAIR with the E190/195 order for mainline service with their airplanes in is to themselveshe USA? Nobody I can recall. their E-170 and 175 appear to be doing well. But they seemed to ignore what they were doing in the E2 in making the weight beyond what the ALPA contract stated knowing good and Well the Pilot union was watching them and the US Majors like a hawk! United went all the way to China to find A319's to Not buy the E-195. Why? Because in buying the E-195? the UA-ALPA crews would have then extrapolated the E-195 down to the smaller models and then demanded to fly them ALL!
Delta had the right Idea with their A220's, It remains to be seen what their pilots might want from them. Embraer is in this fix because they did this to themselves!
they exceeded the weight limits and they miscalculated their overall impact on the US Market in light of US-ALPA's contract provisions. So?
they now have NO Choice but to .go "head up" with Boeing and Airbus. Can they? Surely. But what are they willing to Lose if they fail? OR?
What price are they willing to Risk in prompting an ALPA strike? Because that's what it will take for them to have their way.. Could be?
Embraer might want to match the A220 "stride for stride" with another Model and designation.



Embraer bet that the scope clause would be changed eventually and, let's be honest, there are still possibilities for it to be changed in the reorganization that the market will face after the Covid crisis. If they change the clauses the M100 dies before arriving and the 175E2 will be ready to be sold to anyone who wants to. The Boeing partnership would help a lot in the lobbying necessary to chance the scope clauses that have been altered before do increase the limits of the scope clause.

and? Pray Tell? How the Scope clause would be changed and Just who would force that change in the USA? What Major airline is going to risk a strike by their Pilots in this time frame? Especially? When ALPA has pay scales in place FOR the E-175 thru -195 to be flown in mainline service already? ALPA already Has them covered!
In Time? the US Majors Might well bring the regional E175-E190 flying in house and Eliminate much of the UAX, Eagle and Delta Connection flying. But it's NOT going to be in the Next 10 minutes or even the Next 10 months! Though it may be in the next 10 years.
 
VV
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 5:34 am

Sokes wrote:
VV wrote:


Correct.

There is absolutely no need to develop a better ATR.

Dash 8 Q400 is not a competition. It is overpowered and more expensive to operate than ATR.

That's what is always said. But I find ATR is under-powered.
How do the two planes compare in maintenance?


Most probably maintenance cost is already included when people say it is more expensive to operate.

Dash 8 Q400 has better range capability and can fly faster. It is an interesting feature for some airlines, but it is probably the reason it is more expensive to operate.
 
VV
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 9:57 am

From the discussion above, these are the points that seem to be outstanding.
  • Embraer and Boeing failed to form a joint-venture in the commercial aircraft business.
  • In addition, a press article mentions that Mitsubishi Heavy Industry (MHI) cuts SpaceJet's budget by 50% and review the SpaceJet M100 project.
  • Bombardier CRJ program is acquired by MHI with the end of CRJ production expected in 2020.

Some posters have already mentioned the points below. Are they correct?
  • With the end of CRJ900 production, the E175 (E1) will be the only 76 seater regional jet that complies with the scope clause as it is currently defined. This is valid until M100 enters into service someday.
  • Embraer E175 will be ready in 2021, but it does not comply with the scope clause for 76 seater. However, it will be the only current generation 76 seater in the market until M100 enters into service someday.
  • Without the joint venture between Embraer and Boeing there will not be a new 50-70 seat regional turboprop in the next ten years.

Basically during the next ten years (roughly),
  • Embraer is the only one that can deliver 76 seater regional jet until M100 is ready someday.
  • ATR enjoys a very dominant position in the 50-70 seat turboprop market.
 
bkmbr
Posts: 262
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 1:12 pm

strfyr51 wrote:
and? Pray Tell? How the Scope clause would be changed and Just who would force that change in the USA? What Major airline is going to risk a strike by their Pilots in this time frame? Especially? When ALPA has pay scales in place FOR the E-175 thru -195 to be flown in mainline service already? ALPA already Has them covered!
In Time? the US Majors Might well bring the regional E175-E190 flying in house and Eliminate much of the UAX, Eagle and Delta Connection flying. But it's NOT going to be in the Next 10 minutes or even the Next 10 months! Though it may be in the next 10 years.



No, to be honest, Embraer will just need sit back and wait for things to happen naturally. To the sadness of Embraer's haters everywhere, with the end of the CRJ the 175 became the only jet in his segment currently in production and with units being delivered regularly, and this can be seen in the number of 175E1 orders that are still waiting for deliveries. Only Republic Airlines has 100 of them on order, meanwhile Skywest has 26 on order, United has 20 and American has 11. The moment things start to normalize in the market, the trend is for regional aviation to recover faster than long-haul flights and at that moment it will be more important for companies to have ERJs than 787s and A350s in operation.
Meanwhile, the more than 600 175E1 delivered to date are accumulating cycles and one hour they will have to be replaced. The 175E1 itself, which is already a 15-year-old project will became a hard sell and eventually it will become imperative to replace it with something more modern. Embraer will not continue producing an older jet for much longer after the 175E2 is certified and Mitsubishi will continue with its 15-year soap opera of developing an airplane that changes specifications every two years and is never certified. It won't be long before Embraer has certified the 175E2 and the model be ready to be ordered and delivered, and companies will need to replace these units currently in use with something. If not with the 175E2, what will it be with? The ATR72?
If the scope clause is not expanded to include 175E2, eventually the only viable option for the big companies will be to actually bring these regional operations within their own structures and eliminate the need for those regional airlines all together, at which point the scope clause will be irrelevant. In the current situation. I believe that the chances of a pilots strike right now and for the next 5 years will be almost nil. With the number of unemployed pilots that will be placed on the post Covid market (from what I read right here on the forum only Delta should get rid of seven thousand of them ) it will be enough to the companies just switch to non-unionized pilots and ALPA does not have much to do about it. As you said, this is NOT going to be in the next 10 minutes or even the next 10 months but eventually it will happen, and without competitors in the market, Embraer simply waits for the natural development of the situation because the companies themselves will force the pilot to accept that, more or less in the same way that Qantas did in the sunrise project.
Last edited by bkmbr on Fri May 15, 2020 1:17 pm, edited 1 time in total.
 
bkmbr
Posts: 262
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Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 1:13 pm

VV wrote:
Some posters have already mentioned the points below. Are they correct?
With the end of CRJ900 production, the E175 (E1) will be the only 76 seater regional jet that complies with the scope clause as it is currently defined. This is valid until M100 enters into service someday.


If the M100 ever goes into service I would say.
 
TonyClifton
Posts: 153
Joined: Thu May 14, 2020 3:19 pm

Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 1:57 pm

bkmbr wrote:
strfyr51 wrote:
and? Pray Tell? How the Scope clause would be changed and Just who would force that change in the USA? What Major airline is going to risk a strike by their Pilots in this time frame? Especially? When ALPA has pay scales in place FOR the E-175 thru -195 to be flown in mainline service already? ALPA already Has them covered!
In Time? the US Majors Might well bring the regional E175-E190 flying in house and Eliminate much of the UAX, Eagle and Delta Connection flying. But it's NOT going to be in the Next 10 minutes or even the Next 10 months! Though it may be in the next 10 years.



No, to be honest, Embraer will just need sit back and wait for things to happen naturally. To the sadness of Embraer's haters everywhere, with the end of the CRJ the 175 became the only jet in his segment currently in production and with units being delivered regularly, and this can be seen in the number of 175E1 orders that are still waiting for deliveries. Only Republic Airlines has 100 of them on order, meanwhile Skywest has 26 on order, United has 20 and American has 11. The moment things start to normalize in the market, the trend is for regional aviation to recover faster than long-haul flights and at that moment it will be more important for companies to have ERJs than 787s and A350s in operation.
Meanwhile, the more than 600 175E1 delivered to date are accumulating cycles and one hour they will have to be replaced. The 175E1 itself, which is already a 15-year-old project will became a hard sell and eventually it will become imperative to replace it with something more modern. Embraer will not continue producing an older jet for much longer after the 175E2 is certified and Mitsubishi will continue with its 15-year soap opera of developing an airplane that changes specifications every two years and is never certified. It won't be long before Embraer has certified the 175E2 and the model be ready to be ordered and delivered, and companies will need to replace these units currently in use with something. If not with the 175E2, what will it be with? The ATR72?
If the scope clause is not expanded to include 175E2, eventually the only viable option for the big companies will be to actually bring these regional operations within their own structures and eliminate the need for those regional airlines all together, at which point the scope clause will be irrelevant. In the current situation. I believe that the chances of a pilots strike right now and for the next 5 years will be almost nil. With the number of unemployed pilots that will be placed on the post Covid market (from what I read right here on the forum only Delta should get rid of seven thousand of them ) it will be enough to the companies just switch to non-unionized pilots and ALPA does not have much to do about it. As you said, this is NOT going to be in the next 10 minutes or even the next 10 months but eventually it will happen, and without competitors in the market, Embraer simply waits for the natural development of the situation because the companies themselves will force the pilot to accept that, more or less in the same way that Qantas did in the sunrise project.

I’m not sure how airlines can just “switch to non-unionized pilots”. COVID or not, that isn’t a thing.
 
bigb
Posts: 1094
Joined: Fri Nov 07, 2003 4:30 pm

Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 2:47 pm

bkmbr wrote:
strfyr51 wrote:
and? Pray Tell? How the Scope clause would be changed and Just who would force that change in the USA? What Major airline is going to risk a strike by their Pilots in this time frame? Especially? When ALPA has pay scales in place FOR the E-175 thru -195 to be flown in mainline service already? ALPA already Has them covered!
In Time? the US Majors Might well bring the regional E175-E190 flying in house and Eliminate much of the UAX, Eagle and Delta Connection flying. But it's NOT going to be in the Next 10 minutes or even the Next 10 months! Though it may be in the next 10 years.



No, to be honest, Embraer will just need sit back and wait for things to happen naturally. To the sadness of Embraer's haters everywhere, with the end of the CRJ the 175 became the only jet in his segment currently in production and with units being delivered regularly, and this can be seen in the number of 175E1 orders that are still waiting for deliveries. Only Republic Airlines has 100 of them on order, meanwhile Skywest has 26 on order, United has 20 and American has 11. The moment things start to normalize in the market, the trend is for regional aviation to recover faster than long-haul flights and at that moment it will be more important for companies to have ERJs than 787s and A350s in operation.
Meanwhile, the more than 600 175E1 delivered to date are accumulating cycles and one hour they will have to be replaced. The 175E1 itself, which is already a 15-year-old project will became a hard sell and eventually it will become imperative to replace it with something more modern. Embraer will not continue producing an older jet for much longer after the 175E2 is certified and Mitsubishi will continue with its 15-year soap opera of developing an airplane that changes specifications every two years and is never certified. It won't be long before Embraer has certified the 175E2 and the model be ready to be ordered and delivered, and companies will need to replace these units currently in use with something. If not with the 175E2, what will it be with? The ATR72?
If the scope clause is not expanded to include 175E2, eventually the only viable option for the big companies will be to actually bring these regional operations within their own structures and eliminate the need for those regional airlines all together, at which point the scope clause will be irrelevant. In the current situation. I believe that the chances of a pilots strike right now and for the next 5 years will be almost nil. With the number of unemployed pilots that will be placed on the post Covid market (from what I read right here on the forum only Delta should get rid of seven thousand of them ) it will be enough to the companies just switch to non-unionized pilots and ALPA does not have much to do about it. As you said, this is NOT going to be in the next 10 minutes or even the next 10 months but eventually it will happen, and without competitors in the market, Embraer simply waits for the natural development of the situation because the companies themselves will force the pilot to accept that, more or less in the same way that Qantas did in the sunrise project.


Put down what you are smoking for second and stop drinking the E2 kool-aid. None us are hating on Embraer or the E2. Great airplane, bad hand to bet on when gambling. ALPA or APA are not going to give into scope changes. Ch.11 Bankruptcy isn’t going to throw out scope clauses so that an airline can order the damn plane. You act as if the scope will be changed just like that. But you failed to look at the case study and reasonings on why it is not going to be a easy road to get those scope changes. Even in this environment. Embraer has two choices right now, keep making the E1 which I believe they will continue to do so, or redesign the E2 to meet scope compliance. Mainline carriers aren’t going to go fight for scope relief as bad as you think just to order the E2.

So just stop it with hard-on for hoping for scope relief. Airlines can’t just switch to non-union carriers. Do me favor, go take a class on labor-relations.
 
bkmbr
Posts: 262
Joined: Fri Apr 24, 2020 2:27 am

Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 3:04 pm

I`m not drinking the E2 kool-aid, the thing is there's no other option in the horizon expect the E175E2, unless by some miracle Mitsubishi develops and certifies the M100 in record time with half the budget. If the scope does not change what will be the option of the companies when the E175E1 and CRJs reach their cycle limits? The production of the E175E1 will be kept for a while but eventually it will be halted by Embraer and flying with previous generation planes indefinitely for lack of options is not going to be the solution on the long run. What do you think will be the option for companies, seeking to please their shareholders or their unionized pilots? Just as ALPA and APA were forced to accept the change of scope clauses in the past, they will eventually be forced to accept it again. Is just business as usual.
 
TonyClifton
Posts: 153
Joined: Thu May 14, 2020 3:19 pm

Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 3:24 pm

bkmbr wrote:
I`m not drinking the E2 kool-aid, the thing is there's no other option in the horizon expect the E175E2, unless by some miracle Mitsubishi develops and certifies the M100 in record time with half the budget. If the scope does not change what will be the option of the companies when the E175E1 and CRJs reach their cycle limits? The production of the E175E1 will be kept for a while but eventually it will be halted by Embraer and flying with previous generation planes indefinitely for lack of options is not going to be the solution on the long run. What do you think will be the option for companies, seeking to please their shareholders or their unionized pilots? Just as ALPA and APA were forced to accept the change of scope clauses in the past, they will eventually be forced to accept it again. Is just business as usual.

Sure, but the thing with negotiation is it’s not just forced to accept. Scope is where it is, and the company can’t throw down a new contract with new limits and force anybody to sign. Even in Ch.11 it’s a negotiated process. I don’t understand the pathological obsession on this site with increasing RJ scope. Scope even contracts during this era, with the amount of mainline jets being parked. Ratios of mainline to regional jets are present in various contracts. Large RJs are a long ways form needing replacement. The oldest 175/900 in Delta Connection service is probably 2006 era. Most of these jets have 20 year life spans, so we are six years away from needing replacement, not to mention no airline has the appetite for capital expenses right now.
 
VV
Posts: 1702
Joined: Sat Feb 13, 2016 1:03 pm

Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 3:28 pm

bkmbr wrote:
I`m not drinking the E2 kool-aid, the thing is there's no other option in the horizon expect the E175E2, unless by some miracle Mitsubishi develops and certifies the M100 in record time with half the budget. If the scope does not change what will be the option of the companies when the E175E1 and CRJs reach their cycle limits?
...


The E175 (E1) production is limited by the ICAO emission requirement that will enter into force in 2028 or so.

As you mentioned in your comment, the E175-E2 will be the only available 76 seater in the future, unless Mitsubishi succeeds to certify the M100 someday.

So yeah, this is an interesting situation where only Embraer will be able to deliver 76 set regional jets in the next, say ten to twelve years, that is the E175 (E1) followed by E175-E2.

The other option is that airline industry drops 76 seat regional jets altogether.
 
Jungleneer
Posts: 55
Joined: Sat Nov 09, 2019 1:56 am

Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 3:43 pm

VV wrote:
The other option is that airline industry drops 76 seat regional jets altogether.


Never though about this, but it makes sense. Airlines might want to put pressure reducing mainline payrates, and this would not justify 76 seaters any longer.
 
TonyClifton
Posts: 153
Joined: Thu May 14, 2020 3:19 pm

Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 3:50 pm

Jungleneer wrote:
VV wrote:
The other option is that airline industry drops 76 seat regional jets altogether.


Never though about this, but it makes sense. Airlines might want to put pressure reducing mainline payrates, and this would not justify 76 seaters any longer.

You don’t even have to “reduce mainline pay rates”. You sit down and negotiate a rate for ERJs, CRJs, whatever. Less than current small narrowbodies such as ERJ-190, A220, 717. Regional rates were ever ticking upwards before COVID, making that move seemingly inevitable. Ultimately the large RJ flying will return to majors, it’s just a question of when, and arguably this delayed it.
 
bkmbr
Posts: 262
Joined: Fri Apr 24, 2020 2:27 am

Re: Updated: Boeing Terminates Agreement to Establish Joint Ventures with Embraer

Fri May 15, 2020 4:10 pm

TonyClifton wrote:
Sure, but the thing with negotiation is it’s not just forced to accept. Scope is where it is, and the company can’t throw down a new contract with new limits and force anybody to sign. Even in Ch.11 it’s a negotiated process. I don’t understand the pathological obsession on this site with increasing RJ scope. Scope even contracts during this era, with the amount of mainline jets being parked. Ratios of mainline to regional jets are present in various contracts. Large RJs are a long ways form needing replacement. The oldest 175/900 in Delta Connection service is probably 2006 era. Most of these jets have 20 year life spans, so we are six years away from needing replacement, not to mention no airline has the appetite for capital expenses right now.


Regional jets end up burning through their available operational cycles much faster than larger, long-haul planes because of their usage profile which makes the need to replace them even faster than larger planes. There are already some cases of older E170E1 and E175E1 that have been scrapped (probably due to the number of cycles being exhausted) or near the end of their operational life and this should accelerate from the moment operations restart and the focus are on regional rather than long-haul flights. In addition, you have to take into consideration the time it takes between ordering and receiving the aircraft. In some cases 6 years can be a very short term, especially with all the market demand will be concentrated on a single company to replace all the CRJs and E170E1/E175E1 currently flying at virtually the same time. There may be a reduction in the rate at which the fleets will be renewed, but this need will not go away because of Covid, furthermore the customers will not accept the "downgrade" of an E175 to an ATR72 so easily without a reduction in ticket prices (what I don't see happening so soon).

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