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Embraer maintains focus on US market amid unchanged scope clause

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Embraer maintains focus on US market amid unchanged scope clause
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Embraer executives have indicated no immediate changes to the US scope clause that would prompt a restart of the E175-E2 development. The company's leadership acknowledged the ongoing strength of the E175-E1 in the market, despite limited prospects for altering current agreements.

During Embraer's Investor Day in New York on November 18, Arjan Meijer, CEO of Embraer Commercial Aviation, stated there are no anticipated short-term changes to scope clauses. He noted this is not an opportune moment for such adjustments. Meijer praised the E175-E1's performance as a key factor preventing airlines from pursuing scope clause modifications with pilot unions.

"The E175-E1 was so good that the gap of the E175-E2, which had a smaller engine, which had a smaller gap in terms of fuel burn, it was not enough for airlines to say, 'Okay, let’s go through the hassle to change the scope clause to get the E175-E2.'"

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Meijer also highlighted future discussions about reducing aviation's environmental impact and fuel consumption. Changes could involve seat count or maximum takeoff weight (MTOW) alterations at regional airlines in the US.

"[The scope clause] can either change the seat count or it can change the maximum takeoff weight [MTOW]. I think short term, no, but I think long term, I think we are going to have to see what is next to cover that base."

US agreements currently limit regional carriers' aircraft size to 76 passengers or an MTOW of 86,000 pounds. The E175-E2 exceeds these limits with a capacity for up to 90 passengers and an MTOW of 98,120 pounds.

Embraer paused E175-E2 development in February 2022 due to these constraints. Similarly, Mitsubishi halted its SpaceJet program in February 2023 after facing similar challenges.

Meijer added that smaller jets within the 50-seat market segment are declining without new models entering production. Future airline operations may rely on larger jets seating between 80 and 100 passengers.

"Maybe the E190-E2 could be something that could fit [that market]. This is me maybe wishfully looking into the future."

The number of active small regional jets in the US has decreased significantly since 2019. Airlines continue adjusting schedules with larger regional jets but have yet to reach pre-pandemic levels.

Despite these challenges, Francisco Gomes Neto, President and CEO of Embraer, emphasized America's importance as a market for Embraer over its 45-year presence there.

"[The] US is one of the most important markets for Embraer and we see a lot of opportunities to grow our presence in the US even further."

Neto forecasts sales of up to 300 E175-E1 jets over ten years and sees potential for expanding routes using Embraer's E2 family aircraft efficiently.

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