Brazilian Embraer is a company that is both familiar and unfamiliar to Finns. Familiar because many of us have flown on Finnair’s Embraer aircraft, but unfamiliar because Embraer’s stock has not been widely followed or mentioned on this forum, for example. The duopoly of Airbus and Boeing has dominated passenger aircraft manufacturing for decades, but due to the latter’s difficult situation, Embraer surprisingly has an opportunity to make a significant leap forward and start breaking this established order. Over the past five years, this stock has been an excellent investment, with its share price having increased almost tenfold.
But is the journey just beginning? In my opinion, the best introduction to the company’s history and its opportunities to break the Boeing and Airbus duopoly is provided by Mentour Pilot on his YouTube channel, which thoroughly reviews the current market situation between manufacturers. There is a clear gap in the market for Embraer, but does the company have the courage and capacity to take on the challenge? On the other hand, if the growth leap succeeds, Embraer could have the opportunity to multiply the company’s revenue and profit.
It largely depends on whether the company dares to develop the next size category of passenger jet, which would challenge Airbus’s A320 class and Boeing’s 737 MAX class aircraft. Embraer has a strong track record of developing new passenger jet models without delays or cost overruns. Now the path would be, so to speak, open, as Boeing’s resources are not sufficient for developing new models, but even for Embraer, this would involve a significant investment, likely requiring external assistance in one form or another. If successful, Embraer could jump to the next size category as a company, becoming an equally strong player alongside Airbus and Boeing.
The most difficult quarter of the year is behind us, and Embraer completed it with flying colors. Several new orders are pending around the world. However, Embraer’s product portfolio lacks a significantly larger passenger aircraft that would be a direct competitor to the A 32x and B737 models.
It might be that Finnair’s fleet will also get 6 more Embraers (E2s) to be operated by Norra in the future, once the company’s strategy has been updated. Also interesting is the competitive landscape between the E2 and the A220, regional aircraft types with slightly different issues; range, passenger capacity, engine problems, etc. The E2 seems to have sold less so far.
In September, a considerable blockbuster order for Embraer from the USA. Mentour pilot had a comprehensive video about this (which I can’t find to link right now), where the background of the order is thoroughly explained. Anyway, it’s an American low-cost airline that chose Embraer when the alternative was the Boeing 737 MAX 7. A very interesting win for the Brazilians!
Then in October, a smaller order for 20 aircraft for TrueNoord.
Embraer has suitable capacity, and at some point, it also becomes clear that the Boeing 737 MAX 7 simply cannot compete with Embraer when the intention is to use short runways.
Mentour Pilot’s thorough analysis of the Avelo deal below. Embraer’s powerful engines are indeed a great asset when flying from short runways. The E 195 -E2 also performs well in terms of fuel economy. It might be under YouTube Premium, though.
. Big deals have certainly landed for Emppu lately. Perhaps more news will come with Finnair’s strategy update.