Casting A Wary Eye At Embraer In Brazil

Wichita has had its problems lately, with the economy, bad publicity from Washington, and soaring unemployment in the business aviation market.

But some of the plane makers say one of their biggest threats is 7,600 miles away in Brazil: Embraer.

The Wichita Eagle reports that Teal Group analyst Richard Aboulafia says Embraer could carve away up to 15-20 percent of the market from Cessna, Hawker Beechcraft, and Bombardier Learjet, Wichita's "Big Three".

"I'm very concerned about them," Hawker Beechcraft CEO Bill Boisture is quoted as saying in the article. "They're entering with price points, size and performance carefully selected, in my view."

Embraer has announced six new bizjets in just the past four years, the most recent being the Legacy 650, a large, long-range $29.5 million dollar airplane announced at the NBAA Meeting and Convention in Orlando two weeks ago. The Legacy 650 is Embraer's 7th bizjet since the company made a commitment to its business aviation program in 2005. Their stated goal is to be a major player in the bizjet market by 2015.

Wichita companies say Embraer has an advantage because of low wage rates, but Luis Carlos Affonso, Embraer executive vice president for executive jets, disagrees with the assessment of Embraer as a low-cost plane maker. He says the majority of Embraer components and raw materials come from U.S. sources, and labor costs are increasing.

Bill Boisture

Affonso said that while he sees Embraer building a brand in the business aviation market, he still considers the Wichita companies to be strong and resillient. "These are very traditional companies," he said. "They have very strong brands and a very strong customer support base. They are very good companies."

FMI: www.embraer.com, www.cessna.com, www.hawkerbeechcraft.com, www.bombardier.com