tomcat wrote:I disagree on two points. First Mitsubishi Heavy has enough firepower to challenge Airbus if need be. Second I disagree that the larger E2 jets (thus the 190 and the 195) would cannibalize the Spacejet M90/M100. The M100 is focused on the US regional market operating under the scope close. The M90 is not much different and it tops at 88 seats (single class with a 31in pitch) whereas the 190E2 offers 104 seats and the 195E2 seats 132 pax at the same seating density. Adding the 190/195E2 to the Spacejet line-up would save the cost of the development of the M200 and would potentially make the M90 redundant but so what. Granted, the Spacejets would have very little commonality with the E2s but this is not much different than the A220/A320 combo. MHI could also put to good use the experience of Embraer with the certification process and it would benefit from its existing customer base.
If Embraer is bound to merge or to be taken over with/by a foreign company, I would expect that they would explore all the potential venues.
There are some points that make me think that a Mitsubishi+Embraer merger is unlikely to occur:
1 - Mitsubishi Heavy Industries only owns part of the Mitsubishi Aircraft Corporation (64% to be more exact) and would need the approval of the other partners (Toyota, Mitsubishi Corporation, Sumitomo and Mitsui) to go ahead in the merger. I would assume that, after the acquisition of Bombardier's CRJ program by Mitsubishi Aircraft Corporation by a heavy discounted price of USD 550 million plus the USD 200 million in liabilities the chance of their approval of the purchase of Embraer’s for at least 4 times the same amount of money seems improbable to me.
2 - Mitsubishi Aircraft Corporation will need to finish the acquisition of Bombardier's CRJ program and gain all the regulatory approvals for this business or cancel the deal all together and probably pay a hefty fine for Bombardier. If Mitsubishi Aircraft Corporation gain all the regulatory approvals for the CRJ program also sems to me very unlikely that the Embraer merger/acquisition/joint venture would be approved by the other countries regulatory authorities since the CRJ deal has a lot of overlay over the operations of Embraer at maintaining the older ERJ airplanes.
3 – The MRJ + E2 will present an incredible overlap between the planes in the market, to be viable in the long term you would need to kill at least half of the E2 line to avoid open cannibalization between the 2 aircrafts, and this seems to me as a bad business decision after all that was invested do certify and operate all those E2 aircrafts already flying in the benefit of an model who has not been certified yet and no one knows how will perform in the market. Would be the same problem that Boeing had with the 717 and 737-600 few years ago and everyone remembers how bad the Boeing 717 project was to Boeing finances. This overlap however did not occurred between the SpaceJet and CRJ projects or between the A220/A320 combo and would also not occur in a merger between Embraer and Boeing or between Embraer and COMAC (well, at least if you not include the ARJ21 but I don’t think that the Chinese would think twice to kill it to keep the E2 selling). To put 2 very similar products to compete against each other doesn’t make financial sense IMHO, but maybe those guys don’t like to earn money so who know what they would do…
4 – Besides the COMAC and Boeing I do not see any other group able to integrate itself with Embraer in the similar manner as those 2. Leonardo and UAC are involved with the Sukhoi Superjet and probably won’t get regulatory approval just as with Mitsubishi (and the same overlap problem as well) and the other 3 other airplane manufactures I can think right now that are big enough to absorb Embraer operations, BAE Systems, General Dynamics and Lockheed Martin, don’t operate in the civilian market anymore and do not seem to want to return to this market after they have experienced in the past with their past projects (and especially BAE Systems who are heavily linked with Airbus).
To be completely honest I`m really hopping that all this confusion is just a smokescreen by Boeing to gain the American Bailout and then return to the negotiation table with Embraer to finally close the deal as a necessary evil to go against Airbus, but besides Boeing and COMAC I don’t see any other realistic option for Embraer. E2 was already having a really bad sales performance before COVID thanks to the aggressive stance Airbus is having to add A220 orders to its portfolio but now the things got even more complicated and I don’t see this situation changing for better any soon. Embraer’s CEO apparently agrees with me since in the Monday conference call he stated that 2020 will be bad but 2021 will be even worst to the company.
But the end I don’t put all the blame Boeing for what is happening with Embraer today since most of this situation Embraer is facing is because how lenient the company was in the market that it dominated before. Yes, Boeing's attitudes of trying to sabotage the C-Series accelerated the process of concentrating on the airplane manufacturer market, but Embraer should have been prepared not only to survive on its own but also to survive if the merger with Boeing go wrong, and not me. it looks like they knew what to do at this moment. Unfortunately right now I don’t think that Embraer stand any chance to survive the fight with Airbus alone, and a Chinese alternative would a be a better end to the company then closing its doors, not to mention that the governmental regulatory approvals worldwide would be much more easier to achieve with COMAC than was with Boeing.