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keesje
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Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 9:19 am

Well versed analyst Richard Aboulafia believes China will pass on Embrear, or Embraer will pass on China / Comac.

An interesting reaction on expectations communicated here and on other platforms, that the well financed, long term ambitious Chinese might step in here.

https://www.forbes.com/sites/richardaboulafia/2020/05/03/china-wont-rescue-embraer-boeing-may-remain-its-best-hope/#787516722563

What Richard IMO ignores, is that the Chinese might put a credible RFQ for 300-400 E2's on the table, before they start negoiating.
And discuss a JV instead of a take-over. Changing the setting.

The Chinese would be smart enough to be keep the defernse business out of the scope of such a JV.

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source: https://en.wikipedia.org/wiki/Embraer_E-Jet_E2_family
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mxaxai
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 9:57 am

Duh. In other news, Thailand will not rescue Boeing, and New Zealand will not rescue Airbus.
 
Jomar777
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 10:20 am

The E2 Project will become part of Boeing's portfolio just as the C-Series became the A220 for Airbus.
With the ongoing US-China Trade War, any link-up between China/COMAC with Embraer is unlikely in the medium term (on short term, COVID19 probably has made it very unlikely).

So, he is mainly stating the basic.
 
IWMBH
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 10:29 am

Why would anyone pay serious money for something that can be bought for next to nothing in a couple of months?
 
hooverman
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 11:10 am

IWMBH wrote:
Why would anyone pay serious money for something that can be bought for next to nothing in a couple of months?


Exactly. They will be interested soon enough.
They will be buying companies left and right with these low stock prices due to Corona.
 
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keesje
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 11:51 am

hooverman wrote:
IWMBH wrote:
Why would anyone pay serious money for something that can be bought for next to nothing in a couple of months?


Exactly. They will be interested soon enough.
They will be buying companies left and right with these low stock prices due to Corona.


You can say anithing about the Chinese, but not that they are short term opportunists.
To suceed with Embraer you need a win-win with the broader Embraer stake holders.

A Chinese 300-400 aircraft E2 RFQ might a be nice invitation to discuss. Brasil in not in a trade war with China.
https://www.worldpoliticsreview.com/art ... -argentina
"Never mistake motion for action." Ernest Hemingway
 
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Antaras
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 11:58 am

So where is the potential investor? Cambodia, Vietnam or ... Wakanda?
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sxf24
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 12:29 pm

keesje wrote:
hooverman wrote:
IWMBH wrote:
Why would anyone pay serious money for something that can be bought for next to nothing in a couple of months?


Exactly. They will be interested soon enough.
They will be buying companies left and right with these low stock prices due to Corona.


You can say anithing about the Chinese, but not that they are short term opportunists.
To suceed with Embraer you need a win-win with the broader Embraer stake holders.

A Chinese 300-400 aircraft E2 RFQ might a be nice invitation to discuss. Brasil in not in a trade war with China.
https://www.worldpoliticsreview.com/art ... -argentina


The only need for E2s in China is in the short term. When traffic fully recovers, there is not airspace or airfield capacity to operate so many small aircraft.

I don’t think this diminishes China’s interest in Embraer.
 
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par13del
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 12:41 pm

The market is in the USA or in the west, Emb just does not have the money to correct their fatal mistake which was to assume that if they build it scope will fall.
If they make the a/c scope compliant, there will be interest in the USA and elsewhere since they will get economies of scale, they just need the money to make the adjustments required.
 
MIflyer12
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 1:03 pm

hooverman wrote:
IWMBH wrote:
Why would anyone pay serious money for something that can be bought for next to nothing in a couple of months?


Exactly. They will be interested soon enough.
They will be buying companies left and right with these low stock prices due to Corona.


It doesn't always work that way with large, complex organizations. If you let it bleed out/break apart for too long you can't always put the pieces back together to salvage value.
 
IWMBH
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 1:08 pm

MIflyer12 wrote:
hooverman wrote:
IWMBH wrote:
Why would anyone pay serious money for something that can be bought for next to nothing in a couple of months?


Exactly. They will be interested soon enough.
They will be buying companies left and right with these low stock prices due to Corona.


It doesn't always work that way with large, complex organizations. If you let it bleed out/break apart for too long you can't always put the pieces back together to salvage value.


I don't see why they can't get it when Embraer is (almost) bankrupt.
If China has any interest at all in the factories and workers than they can scoop them up then.
 
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keesje
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 1:31 pm

China isn't in the scoop up & exploit business opportunities for short term gain business. 20 years is nothing for them.
"Never mistake motion for action." Ernest Hemingway
 
SEU
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 1:34 pm

Jomar777 wrote:
The E2 Project will become part of Boeing's portfolio just as the C-Series became the A220 for Airbus.
With the ongoing US-China Trade War, any link-up between China/COMAC with Embraer is unlikely in the medium term (on short term, COVID19 probably has made it very unlikely).

So, he is mainly stating the basic.


Didnt Boeing pull the plug on that?
 
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 1:37 pm

keesje wrote:
China isn't in the scoop up & exploit business opportunities for short term gain business. 20 years is nothing for them.

It really comes down to whether it is in Brazil’s long term interest to sell to China.

China has no qualms about taking the IP for themselves and disposing of the original company/factory when it no longer suits them.
 
MIflyer12
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 1:50 pm

IWMBH wrote:
MIflyer12 wrote:
hooverman wrote:

Exactly. They will be interested soon enough.
They will be buying companies left and right with these low stock prices due to Corona.


It doesn't always work that way with large, complex organizations. If you let it bleed out/break apart for too long you can't always put the pieces back together to salvage value.


I don't see why they can't get it when Embraer is (almost) bankrupt.


I understand you don't see it - that's why I cautioned it. Skilled people start leaving, be it skilled trades or management, and spots get filled - if they get filled - with sub-par candidates. New investments get deferred. In this specific situation you also have the risk of more involvement by the government of Brazil (loans, equity stake, management direction) as it seeks to maintain jobs or minimize losses on its investment. The Chinese aren't going to take instruction from the government of Brazil.
 
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 1:52 pm

Where is this fantasy that China might order E2s coming from?

As the OP link notes, the ARJ-21 will be favored over the E2-175 for reasons of political pride. Because of that pride, airlines will either offer low frequency narrowbody service or high frequency ARJ-21 service.


Delta could order 200 A220 tomorrow, but it won't happen.

One currently gets 7.06 Yuan per USD. I doubt China will throw away $15 billion USD at this time.

China has been brutal with Brazilian commodities, that matters more than Embraer.

As Polot notes, China has no qualms on taking IP and dumping the purchased company. They certainly won't fund a competitor to the MA700. They might want engineering help, before they fire everyone to take credit in China.

Lightsaber
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 2:35 pm

sxf24 wrote:
The only need for E2s in China is in the short term. When traffic fully recovers, there is not airspace or airfield capacity to operate so many small aircraft.

I don’t think this diminishes China’s interest in Embraer.


The E2 demand in China probably would be secondary to the Chinese interest in Embraer. The know-how of creating and certifying airplanes quickly and an established and robust support network and global customer list that would certainly help to improve the chances of exporting the C919 and C929 in the not too distant future will count a lot more. Boeing wanted Embraer primarily because of the E2 line, the support network was a bonus for them, for the Chinese the E2 is would be a bonus for everything else that in that kind of deal. Remember that Mitsubishi paid almost USD 800 million (USD 550 million on payment and USD 220 million in liabilities) just to have all the CRJ logistics ready to be able to put MRJ on the market.
 
 
IWMBH
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 2:46 pm

MIflyer12 wrote:
IWMBH wrote:
MIflyer12 wrote:

It doesn't always work that way with large, complex organizations. If you let it bleed out/break apart for too long you can't always put the pieces back together to salvage value.


I don't see why they can't get it when Embraer is (almost) bankrupt.


I understand you don't see it - that's why I cautioned it. Skilled people start leaving, be it skilled trades or management, and spots get filled - if they get filled - with sub-par candidates. New investments get deferred. In this specific situation you also have the risk of more involvement by the government of Brazil (loans, equity stake, management direction) as it seeks to maintain jobs or minimize losses on its investment. The Chinese aren't going to take instruction from the government of Brazil.


I don't think we see this possible (but unlikely) take-over the same way. I don't think China is interested in Embraer. They might be interested in the E2 design because it would give them a foothold in the west. The production facility will probably be moved to China. They also would slap a ARJ-sticker on the E2 and that would be the end of that.

They might encounter some problems when they try to restart production, but that is nothing China can't deal with.
 
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 2:52 pm

IWMBH wrote:
MIflyer12 wrote:
IWMBH wrote:

I don't see why they can't get it when Embraer is (almost) bankrupt.


I understand you don't see it - that's why I cautioned it. Skilled people start leaving, be it skilled trades or management, and spots get filled - if they get filled - with sub-par candidates. New investments get deferred. In this specific situation you also have the risk of more involvement by the government of Brazil (loans, equity stake, management direction) as it seeks to maintain jobs or minimize losses on its investment. The Chinese aren't going to take instruction from the government of Brazil.


I don't think we see this possible (but unlikely) take-over the same way. I don't think China is interested in Embraer. They might be interested in the E2 design because it would give them a foothold in the west. The production facility will probably be moved to China. They also would slap a ARJ-sticker on the E2 and that would be the end of that.

They might encounter some problems when they try to restart production, but that is nothing China can't deal with.

The only thing China would actually be interested in with Embraer is the engineers.

And after they have helped out/trained their Chinese counterparts enough China would be done with Embraer. China is not sharing glory with Brazil.
 
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keesje
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 8:20 pm

Oops forgot, China is the new evil do’ers behind everything bad :rotfl:

I don’t see China taking over Embraer, just a long term strategic JV.

Embraer doing C919, C929 work, helping out in certification.

Embraer using the MA-700 fuselage, wings as starting point for a Brazilian Turboprop.

Maybe a smaller 20-30 passenger turbo prop together.

China buying a hundreds of E2’s for a good price, maybe assembling a few hundred in China.

We have to think in win-win opportunities instead of fears.

https://www.flightglobal.com/aerospace/ ... 55.article
"Never mistake motion for action." Ernest Hemingway
 
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 8:26 pm

keesje wrote:
Embraer using the MA-700 fuselage, wings as starting point for a Brazilian Turboprop.

China sharing MA-700 fuselage and wings? :rotfl: Why would China do that?

China doesn’t do JVs to give the other company help. This isn’t China suddenly being the “new evil do’ers behind everything bad.” This is their standard documented business practice.

Sure Embraer and China can do a JV. Don’t be surprised that by the end of it Brazil looks back and realizes China benefited far more from it than Embraer did, and Embraer now suddenly has to compete against these Chinese planes they helped originally designed.
 
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Mon May 04, 2020 9:48 pm

IWMBH wrote:
MIflyer12 wrote:
hooverman wrote:

Exactly. They will be interested soon enough.
They will be buying companies left and right with these low stock prices due to Corona.


It doesn't always work that way with large, complex organizations. If you let it bleed out/break apart for too long you can't always put the pieces back together to salvage value.


I don't see why they can't get it when Embraer is (almost) bankrupt.
If China has any interest at all in the factories and workers than they can scoop them up then.


Is Embraer's position and outlook really much worse than other Manufacturers?

Boeing and Airbus would appear to plenty of trouble themselves. Mitsubishi still hasn't got any Jets in routine operation nor have the Chinese to speak of and the Russians can't set up a spare parts network. You could argue the entire Industry is a basket case but as the World is going to need new Planes again one day it's safe to assume Governments and Shareholders are going to stump up more $ at some point.

Embraer has been a leader in it's class so I don't see Brazil letting them fold to be much more likely than the US letting Boeing fold. Not to say there won't be some Merger activity but the notion their fate is being flogged off for a few Pennies to whoever wants their Engineers is a touch pessimistic in my opinion.
 
bkmbr
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Tue May 05, 2020 2:36 am

Polot wrote:
Sure Embraer and China can do a JV. Don’t be surprised that by the end of it Brazil looks back and realizes China benefited far more from it than Embraer did, and Embraer now suddenly has to compete against these Chinese planes they helped originally designed.


If Embraer does not survive after the coronavirus and the Airbus attacks, as there is a real possibility in the long run, all this will mean absolutely nothing. Embraer may need cash and without the Boeing option, and if the Brazilian government is not able to make generous contributions to the company in the form and subsidized loans and financial contributions in exchange for partial ownership perhaps the only option is to make a deal with the devil with the Chinese. It may cost the soul of the company but between losing the soul or dying I don't know which option would be the "least worst" option for de company.
If E2's sales performance does not improve, eventually the need for E3 will arise and there will be no cash on hand (or customers) for that.
 
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Tue May 05, 2020 6:28 am

The only use of Embraer for China is if it is possible to obtain some technical knowledge to build the domestic aviation industry. The airplane market is already heavily engulfed in protectionism and government subsidies to the point that the Chinese would be better off building its own industry and selling to the "rest of the world".
 
Ertro
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Tue May 05, 2020 2:18 pm

I remember pretty similar thoughts were prevalent in the press when China bought the car manufacturer Volvo in 2010. China sucking the company dry and starting to manufacture some chinese designed cheap knockoffs which they try to flock to west misusing the memories of the brand name. Nothing like that happened and today Volvo is strongest it has ever been manufacturing great cars with strong ties to Sweden. Comparable car brand from sweden Saab is today dead after Chinese offers to buy were blocked in 2011.
 
morrisond
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Tue May 05, 2020 2:29 pm

Mitsubishi buying EMB (or a 50/50 joint venture) makes a lot more sense to me.

They then do a new Turbo Prop as well.
 
Jomar777
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Tue May 05, 2020 9:25 pm

SEU wrote:
Jomar777 wrote:
The E2 Project will become part of Boeing's portfolio just as the C-Series became the A220 for Airbus.
With the ongoing US-China Trade War, any link-up between China/COMAC with Embraer is unlikely in the medium term (on short term, COVID19 probably has made it very unlikely).

So, he is mainly stating the basic.


Didnt Boeing pull the plug on that?


Nope. Going ahead pending red tape clearance which is mainly a case of when rather than if
 
bkmbr
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Tue May 05, 2020 11:32 pm

morrisond wrote:
Mitsubishi buying EMB (or a 50/50 joint venture) makes a lot more sense to me.

They then do a new Turbo Prop as well.



It would be a festival of cannibalization in the RJ market. In addition to not making sense from the point of view of product lineup, this merger would have a tremendous difficulty being approved by the regulatory bodies after the acquisition of the CRJ line by Bombardier by the Japanese.
 
morrisond
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Wed May 06, 2020 1:40 am

bkmbr wrote:
morrisond wrote:
Mitsubishi buying EMB (or a 50/50 joint venture) makes a lot more sense to me.

They then do a new Turbo Prop as well.



It would be a festival of cannibalization in the RJ market. In addition to not making sense from the point of view of product lineup, this merger would have a tremendous difficulty being approved by the regulatory bodies after the acquisition of the CRJ line by Bombardier by the Japanese.


It sounds like the CRJ deal is dead. It may not be that crazy.
 
bkmbr
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Wed May 06, 2020 3:26 am

morrisond wrote:
It sounds like the CRJ deal is dead. It may not be that crazy.


From the same guy who predicted that the United States and Canada would suspend every single flight. FliegerFaust cannot be trusted as a reliable source of news. If this information was coming from a reliable source it was one thing, but I think we have an obligation to be skeptical even first because of the source of this news and second because the cost to cancel this purchase would certainly be very high for Mitsubishi (since Bombardier must have placed a lot of locks to ensure that you would not miss this deal).
 
Sokes
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Wed May 06, 2020 1:12 pm

IWMBH wrote:
Why would anyone pay serious money for something that can be bought for next to nothing in a couple of months?

Maybe because that anyone signed a contract to do so?

keesje wrote:
To suceed with Embraer you need a win-win with the broader Embraer stake holders.

Were Bombardier shareholders asked if they agree to sell the C-Series for one Euro?

Ertro wrote:
I remember pretty similar thoughts were prevalent in the press when China bought the car manufacturer Volvo in 2010. China sucking the company dry and starting to manufacture some chinese designed cheap knockoffs which they try to flock to west misusing the memories of the brand name. Nothing like that happened and today Volvo is strongest it has ever been manufacturing great cars with strong ties to Sweden. Comparable car brand from sweden Saab is today dead after Chinese offers to buy were blocked in 2011.

I believe I read the same for Germany. But that's little surprising, as Germany has huge trade deficit. It's a low labor cost country, so why would Chinese investors close down operations?

Even though I believe the Chinese deserve the prejudice they face. They like to buy 100% of a company in other countries, but in their own country foreign investors have to find a local partner which will hold 51%.
How did transfer of railway technology work out?
But then what's the point of running the Communist Party if you can't make a few billions for yourself?

Would the US allow Brazil to sell Embraer to the Chinese?
Would engine manufacturers honor the contracts with Embraer if pressurized by Boeing's political friends?
Why can't the world be a little bit more autistic?
 
IWMBH
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Wed May 06, 2020 1:23 pm

Sokes wrote:
IWMBH wrote:
Why would anyone pay serious money for something that can be bought for next to nothing in a couple of months?

Maybe because that anyone signed a contract to do so?



But... No one did?
 
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keesje
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Wed May 06, 2020 2:27 pm

Sokes wrote:
IWMBH wrote:
Why would anyone pay serious money for something that can be bought for next to nothing in a couple of months?

Maybe because that anyone signed a contract to do so?

keesje wrote:
To suceed with Embraer you need a win-win with the broader Embraer stake holders.

Were Bombardier shareholders asked if they agree to sell the C-Series for one Euro?

Ertro wrote:
I remember pretty similar thoughts were prevalent in the press when China bought the car manufacturer Volvo in 2010. China sucking the company dry and starting to manufacture some chinese designed cheap knockoffs which they try to flock to west misusing the memories of the brand name. Nothing like that happened and today Volvo is strongest it has ever been manufacturing great cars with strong ties to Sweden. Comparable car brand from sweden Saab is today dead after Chinese offers to buy were blocked in 2011.

I believe I read the same for Germany. But that's little surprising, as Germany has huge trade deficit. It's a low labor cost country, so why would Chinese investors close down operations?

Even though I believe the Chinese deserve the prejudice they face. They like to buy 100% of a company in other countries, but in their own country foreign investors have to find a local partner which will hold 51%.
How did transfer of railway technology work out?
But then what's the point of running the Communist Party if you can't make a few billions for yourself?

Would the US allow Brazil to sell Embraer to the Chinese?
Would engine manufacturers honor the contracts with Embraer if pressurized by Boeing's political friends?


I think the tone doesn't reflect respect for the Brasilian Aerospace industry. Nor does demonstrate the values US based investors used to snap up & drain respected family owned aerospace companies. Only going after IP, next quater stock prices. Look up Transdigm as an example. No mercy short term capitalism at the cost of jobs & customers.
"Never mistake motion for action." Ernest Hemingway
 
Sokes
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Wed May 06, 2020 2:47 pm

keesje wrote:
I think the tone doesn't reflect respect for the Brasilian Aerospace industry. Nor does demonstrate the values US based investors used to snap up & drain respected family owned aerospace companies. Only going after IP, next quater stock prices. Look up Transdigm as an example. No mercy short term capitalism at the cost of jobs & customers.

Sorry, but I don't understand what you mean. I had respect for Bombardier. The question is what Boeing and it's political friends respect. Same for Embraer.

I never heard of Transdigm before. According to Wikipedia Transdigm ignored government regulation. That's not capitalism, that's criminal.
"On March 20, 2017, U.S. Representative Ro Khanna sent a letter to the Department of Defense Inspector General describing reports of "waste, fraud, and abuse" by TransDigm Group and calling for an investigation.[22] He wrote that TransDigm was able to operate as a "hidden monopoly" because its subsidiaries failed to report their common corporate ownership on filings with the Department of Defense (DoD). This omission allowed TransDigm to avoid the requirement that monopoly suppliers to DoD report their costs. "
https://en.wikipedia.org/wiki/TransDigm ... onopoly%22
Why can't the world be a little bit more autistic?
 
bkmbr
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Wed May 06, 2020 3:56 pm

Sokes wrote:
Would the US allow Brazil to sell Embraer to the Chinese?


Why the US should allow Brazil to sell Embraer? Brazil is not a property or a colony of the Americans to need their authorization to make any decision related to that.
Let's be honest, most people here don't give a sh*t for Embraer's fate, the only thing they are afraid is that the Chinese start using the know how and established infrastructure created to allow to ERJ to thrive and and take the risk of the Chinese establishing themselves successfully in a sector that is dominated by the American and European duopoly. Embraer is not Lockheed Martin to be consider a strategic asset to the american government, and any American or European decision that tries to hinder or prevent a possible merger, or acquisition, between Embraer and the Chinese will be nothing more than an attempt to ensure that the duopoly of the 2 is not jeopardized by a new player on the market.
 
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lightsaber
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Wed May 06, 2020 4:15 pm

bkmbr wrote:
Sokes wrote:
Would the US allow Brazil to sell Embraer to the Chinese?


Why the US should allow Brazil to sell Embraer? Brazil is not a property or a colony of the Americans to need their authorization to make any decision related to that.
Let's be honest, most people here don't give a sh*t for Embraer's fate, the only thing they are afraid is that the Chinese start using the know how and established infrastructure created to allow to ERJ to thrive and and take the risk of the Chinese establishing themselves successfully in a sector that is dominated by the American and European duopoly. Embraer is not Lockheed Martin to be consider a strategic asset to the american government, and any American or European decision that tries to hinder or prevent a possible merger, or acquisition, between Embraer and the Chinese will be nothing more than an attempt to ensure that the duopoly of the 2 is not jeopardized by a new player on the market.

I believe it is more the ITAR regulations. Pratt has an export permit to provide technical support to Embraer, engines, and parts. With a change of ownership, the permit must be evaluated and the DoD may assert authority.

The most famous example of ITAR is RR Nene given to Russia and reverse engineered into the Mig-15 engine and developed into Mig17/19/21.

https://aviationdoctor.wordpress.com/20 ... orean-peo/

Pratt is in trouble with the DoD for shipping helicopter engines that were supposed to be for commercial applications, but found in an attack helicopter prototype:

https://www.nytimes.com/2012/06/29/busi ... ports.html

So the DoD cares.

Lightsaber
Flu+Covid19 is bad. Consider a flu vaccine, if not for yourself, to protect someone you care about.
 
bkmbr
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Wed May 06, 2020 5:53 pm

lightsaber wrote:
I believe it is more the ITAR regulations. Pratt has an export permit to provide technical support to Embraer, engines, and parts. With a change of ownership, the permit must be evaluated and the DoD may assert authority.

The most famous example of ITAR is RR Nene given to Russia and reverse engineered into the Mig-15 engine and developed into Mig17/19/21.

https://aviationdoctor.wordpress.com/20 ... orean-peo/

Pratt is in trouble with the DoD for shipping helicopter engines that were supposed to be for commercial applications, but found in an attack helicopter prototype:

https://www.nytimes.com/2012/06/29/busi ... ports.html

So the DoD cares.

Lightsaber


That just seems like an excuse to me because it wouldn't make much difference. All the classified information regarding the engines that they could have access after buying Embraer they can also have access by just disassembling and reverse engineering in one of the engines of one of the almost 20 A320neo used by Air China today (who also have technical support, engines, and parts for the PW1000 family) or just simply buying the information straight out from the Irkut MC-21 project. All the information regarding the LEAP engine they already have as well since is the engine been used at the C-919.
 
Jungleneer
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Thu May 07, 2020 12:36 am

Embraer has enough cash for two years. They are far better than Boeing and Airbus in this pandemic. Sure the E-Jets backlog is not big, but Embraer since the privatization has become master of cash management, and is one of their biggest strengths. So for who those think Embraer will go bankrupt, sorry to disappoint you.
 
bkmbr
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Thu May 07, 2020 2:03 am

Jungleneer wrote:
Embraer has enough cash for two years. They are far better than Boeing and Airbus in this pandemic. Sure the E-Jets backlog is not big, but Embraer since the privatization has become master of cash management, and is one of their biggest strengths. So for who those think Embraer will go bankrupt, sorry to disappoint you.


Embraer will not go bankrupt next week, we all know this, the problem I always insist is that you need to look the matter thinking on the long run. The E2 until now has not yet proven itself to be as successful as E1 was in the past, and this can cause problems when the need for Embraer to develop an E3 arises. The A220 will eventually have a "A220neo" in the future but Embraer will be able to have a plane to answer that without putting herself in a position like Bombardier during the developing the C-Series??
Embraer has experienced such a dilemma in the past in the period between the launch of the EMB-120 and the launch of the EMB-145 (which would later become the ERJ-145), it was precisely at that time that the company almost went bankrupt even though it was a company state-owned. Thanks to privatization and subsequent capital investment the company managed to survive and develop the ERJ-145 project, that was at that time been in development for several years inside after the CBA-123 project was scraped. Without this money injection that the company received the ERJ-145 would never have seen the light of day.
I'm personally not worried about the short-term survival of Embraer, I'm worried about the company's long-term viability of the company (2035 and beyond). 15 years may seem like a long time but the time elapsed between the start of operation of E1 (2004 by LOT) and E2 (2018 by Wideroe) was only 14 years.
 
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keesje
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Thu May 07, 2020 11:01 am

I thunk many comapnies / nations with Aerospace ambitions are taking a close look at this moment.

Embraer is a succesfull integrator with an attractive cost basis, installed base & infrastructure.
"Never mistake motion for action." Ernest Hemingway
 
airhansa
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Thu May 07, 2020 12:21 pm

The question is whether Embraer can bring new technology to these countries or if these countries want to use the Embraer brand to sell to western countries. Nearly all countries want to make aircraft are capable of making regional jets - it's just not able to get them certified in the west. So it's basically down to the brand selling to westerners unless you're aware of more complicated tech from the company?
 
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lightsaber
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Thu May 07, 2020 12:36 pm

airhansa wrote:
The question is whether Embraer can bring new technology to these countries or if these countries want to use the Embraer brand to sell to western countries. Nearly all countries want to make aircraft are capable of making regional jets - it's just not able to get them certified in the west. So it's basically down to the brand selling to westerners unless you're aware of more complicated tech from the company?

Making economical regional jets is tough. While I am pessimistic on China saving Embraer, the ARJ-21 and C919 show China doesn't have the ability.

The ARJ-21 was late, over weight, and is obsolete. It needs the larger, thirstier CF-34-10 to compete against the E175 and its smaller CF-34-8.

Embraer has technologically successfully developed a wide range of small to lower mud size business jets; bummer the market moved up-range.

We wouldn't be discussing Embraer this way if they had more successfully selected the markets, e.g., the attempt on the E2-175.

Lightsaber
Flu+Covid19 is bad. Consider a flu vaccine, if not for yourself, to protect someone you care about.
 
bkmbr
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Thu May 07, 2020 1:41 pm

China doesn't have the ability yet, I`m sure that they will eventually have is ability.The money and the political interest for that exists. The big difference between China and the West is that while Western companies think from fiscal year to fiscal year and Western governments think from term to term, China thinks from generation to generation. China's actions shows that they don't mind long-term planning to achieve what they want, and not just in the aviation sector. Huawei showed this well, they started investing in 5G technology when the 3G technology was still starting to become popular, the result of which is that today there is no way to dissociate 5G technology from Huawei, and any 5G solution that does not go through Huawei it is significantly more expensive.
Boeing took a century to get where they are today and Airbus benefited tremendously from the experience of the national companies that preceded it to be able to exist as it is today. The Chinese have a very young civil aviation industry, but they are maturing quickly. A project the size of the C-919 is not something that the industry of a country with no tradition in the sector could achieve in a record time. At this point, an incorporation of Embraer would be extremely beneficial for the Chinese who would learn the "Embraer Way" to develop and certify airplanes, but if they do not purchase it does not mean that they will not eventually achieve the same a few years down the road.
Furthermore, let's be honest, both Boeing and Airbus, which are much more mature companies, had serious problems with delays and budget overruns on projects like the 787, 737max, A380 and A400, so is natural to expect that China would not be able to deliver its first big project like the C-919 on time and at the original estimated cost.
 
Jungleneer
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Re: Richard Aboulafia: China Won’t Rescue Embraer.

Thu May 07, 2020 2:47 pm

Embraer will detail their strategy in the Commercial aviation by May 15th. Lets see what they bring. But the executive jets is doing fine, with P300 and Praetor models being very successful in sales. They have the ability to bring half the revenue from the current commercial aviation, so even if the revenue from Commercial aviation shrinks, the company can continue living. But I honestly think more E1/E2 sales will come in the next years. KLM just announced that is returning flying in Europe, using the E-Jets for this. This is a very promising news.

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