Embraer to decide this year whether to build new plane to take over Bombardier

MONTREAL – Brazilian aircraft manufacturer Embraer still plans to decide by year-end whether to re-engine its E195 or develop a new, larger aircraft to compete with Bombardier’s (TSX:BBD.B) CSeries.

Chief executive Frederico Fleury Curado said Friday that the company is evaluating the merits of stretching its largest aircraft and adding a new engine and wing, or investing more on an even larger two-aircraft family of planes.

Either way, he said, Embraer would only follow the path that makes it more competitive.

Embraer is under pressure to adjust its offering after Boeing announced plans last week to re-engine its family of 737 aircraft. That followed a similar move earlier by Airbus.

All are trying to reduce the fuel burn of their planes to better compete against the promised savings of Bombardier’s new design slated to enter into service the end of 2013.

Curado said a new plane to compete with the smaller Airbus and Boeing planes would have much in common with its existing E jets, giving customers an opportunity for an upgraded product.

Most analysts believe Embraer will elect to install new engines instead of devoting more time and money to come up with a new plane.

Earlier, Embraer beat analyst expectations by earning US$96.4 million or 53 cents per share in the second quarter on US$1.36 billion of revenues.

Analysts had forecasted on average 46 cents per share.

The latest quarterly figures compared with $57.4 million or 32 cents in the same year-earlier period.

The company also raised its 2011 sales and margin guidance with its EBIT target rising 10 per cent to US$465 million.

HangZhou Night Net