Embraer

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Empresa Brasileira de Aeronáutica

Type	Public (NYSE: ERJ) (Bovespa:EMBR3 / EMBR4)
Founded	1969
Headquarters	São José dos Campos, São Paulo, Brazil
Key people	Maurício Botelho, President & CEO
Industry	Aerospace / Defense
Products	Aircraft, aircraft components, mission systems for air and ground operation
Revenue	$3.680 billion USD (2005)
Employees	17,046 (2005)
Slogan	N/A
Website	www.embraer.com

Embraer, the Empresa Brasileira de Aeronáutica S.A., is a Brazilian aircraft manufacturer. The company produces commercial, military, and corporate aircraft. It was Brazil's largest exporter from 1999 to 2001 and is one of the three main exporters in Brazil. Among aircraft manufacturers, it currently has the fourth largest workforce (behind Boeing, Airbus and Bombardier), and the third largest yearly delivery of commercial aircraft (behind Boeing and Airbus).

The company is headquartered in São José dos Campos, São Paulo with its main production facilities and engineering/design offices there also. Embraer also has a production plant in Gavião Peixoto, São Paulo state, where major components are manufactured and flight testing is conducted. This facility possesses a 16,400 foot runway. [1]

Embraer has maintenance and commercial sites in the USA and commercial offices in France, Singapore and China.

As of September 30, 2005, Embraer has a workforce of 17,046 people, including the employees of recently-acquired OGMA in Portugal, and a firm order backlog totalling US$10.4 billion. [2]

On May 3, 2005, the company announced plans to introduce two new aircraft models, dubbed Phenom 100 and 300, in the business aviation market. The aircraft will complement the super mid-size Legacy 600 in the Very Light and Light segments.

On May 2, 2006, Embraer announced plans to commercialize an executive version of its E-190 jet, called Lineage 1000, with first deliveries in mid-2008.[3]

[edit] History

[edit] Foundation

The creation of a Brazilian aircraft manufacurer was planned during the 1940s by the Brazilian Government as part of a technical development formed by the General Command for Aerospace Technology (CTA), the Aeronautics Technological Institute (ITA) and Embraer.

The first step to the creation of a Brazilian aircraft industry was the creation of IPD - Instituto de Pesquisas e Desenvolvimento (Research and Development Institute), current IAE - Instituto de Aeronáutica e Espaço (Aeronautics and Space Institute), which was born inside CTA, on January 1, 1954. In the following years, the IPD developed many aircraft projects, such as the Beija-Flor helicopter. Even without commercial expression, these projects were important to the advance of Brazilian aeronautics development.

The major change occurred on March 29, 1965, when IPD received a proposal of a turboprop biplane from the French engineer Max Holste. A group of engineers led by Ozires Silva would turn this proposal into a larger scale project, the IPD-6504, or Bandeirante, which flew for the first time on October 26, 1968. IPD wanted the 6504 to move into serial production, but faced a lack of interest from private companies. It was clear that the creation of a government-owned company was necessary.

Finally, on July 29, 1969, Embraer was created by the Ministry of Aeronautics. By this time, the company had about 500 employees, including many former engineers from both CTA and ITA, and planned to build two Bandeirante aircraft a month. Ozires Silva became the president of the new company.

[edit] Growth and expansion

Embraer EMB 110 Bandeirante

The three first series version Bandeirante, were delivered in February, 1973 to the Brazilian Air Force. In the same month, Transbrasil bought the first commercial Bandeirante, which made its debut on April 16, 1973. Exports began in 1975, and the Bandeirante proved to be a huge success in the international aviation market, upstaging other aircraft of its category in performance. About 500 Bandeirante were sold, for 36 countries.

Brazil's Ministry of Aeronautics made large efforts to contribute to the growth of Embraer. Two existing projects, the Urupema glider, and the Ipanema agricultural aircraft, were transferred to the new manufacturer. A request for assembly in series of 112 Aermacchi MB-326 trainer aircraft (to be later designated Xavante), was also made. The Ipanema is still produced today, with more than 1,000 units sold. The Xavante was produced for 11 years, with 186 units sold.

In August, 1974, Embraer established a cooperation with Piper Aircraft to assemble many general aviation products by license, including the models PA-28 Cherokee, PA-34 Seneca, and PA-31 Navajo. These aircraft respectively received the designations of EMB 712 Tupi, EMB 810D Seneca and EMB 820C Navajo. All these products, plus the Ipanema, were transferred to Indústria Aeronáutica Neiva subsidiary in March, 1980.

On October 22, 1975, the company's first pressurized aircraft, the Xingu, made its inaugural flight. The aircraft was smaller than the Bandeirante, thus it didn't become a successor; a few dozens Xingu were built, with most being delivered to the French Air Force in 1981. By request of the Ministry of Aeronautics, Embraer developed its first combat aircraft, the Tucano, which made its inaugural flight on December 16, 1980. This aircraft became the most successful turboprop military trainer ever built, with more than 650 units sold around the world.

The development of a regional airliner able to replace the Bandeirante started in the end of the 1970s. This project took the form of a turboprop able to carry 30-40 passengers, the Brasilia, which was certified in May, 1985. Unlike the Bandeirante, the Brasilia begun its career as an exportation product, entering service with the American Atlantic Southeast Airlines (ASA). This was the result of the trust that Embraer gained in the international aviation market with the Bandeirante. The production of Brasilia officially ended on 2002, with 350 units sold; however, the aircraft may still be produced on demand.

In July, 1981, Embraer joined the AMX Program, which purpose was to establish a partnership to develop a subsonic fighter. Together with Aeritalia (current Alenia Aeronautica) and Aermacchi, Embraer worked on the development of the AMX fighter, which was later used to replace old military aircraft on Italia and Brazil. The first Brazilian AMX made its inaugural flight on October 16, 1985. This project gave Embraer access to new technologies, which would be crucial on the following projects.

[edit] 1990 Crisis

The next commercial project was a 19 passengers turboprop developed in partnership with FMA (current Lockheed Martin Aircraft Argentina), the CBA 123 Vector, which made its inaugural flight on July 30, 1990. Although including some of the finest technologies available, the Vector wasn't accepted by the market because of its high price, and was cancelled without a single aircraft being sold.

By the end of the 1980s, government investments on the aerospace industry were largely reduced, due to the Constitution of 1988, which extinguished many forms of support to the industry, and due to the lack of interest in the defense area caused by the end of the Cold War. Combined with the failure of the Vector project, and the crisis in the aviation segment caused by the oil price increase of 1990, made Embraer slide into a deep financial crisis. Massive cuts of expenses were made until 1994, and from the 12,600 employees the company had on 1990, only 3,200 remained. With all this happening, engineers of Embraer were focusing in a new project - a Turbofan regional airliner for 45 passengers, the ERJ 145.

[edit] Privatization and recovery

On December 7, 1994, Embraer was privatized, and Maurício Botelho, former executive director of Bozano Group, was named the new president. Botelho's skills as vendor and businessman greatly contributed to the recovery of the company. Partnerships with other companies such as Parker Hannifin, Allison Engine Company, and Honeywell ensured enough investments to the development of the ERJ 145. The outstanding sales of the new regional jet allowed Embraer to finally recover and regain its position as one of the world's most important aircraft manufacturers. More than 900 ERJ 145 and aircraft based on the ERJ 145 platform (ERJ 135, ERJ 140, Legacy, 145 AEW&C, 145 RS/AGS and P-99) were delivered until early 2006.

The next aircraft to be developed was a modern military trainer and light attack aircraft, the Super Tucano or ALX, which flew for the first time on June 2, 1999. This aircraft was sold to the Brazilian and Colombian air forces, and it's mainly employed in the Amazon region.

On July, 1999, Embraer announced the development of a new family of aircraft: the E-Jets Series, comprising of the Embraer 170, 175, 190 and 195 aircraft. With this decision, Embraer advanced to the 70-110 seat market. The inaugural flight of the first model, the Embraer 170, was made on February 19, 2002.

Today, attempts to expand its presence in the Business jets category with an array of jets of varying sizes: the Lineage 1000, the Legacy 600, the Phenom 100 and the Phenom 300. In the Defense category, Embraer develops mission systems for air and/or ground operation; current customers are Brazil, Mexico, Greece and India.

Embraer said Frederico Fleury Curado will succeed Maurício Botelho as the company's president and CEO next year. Mr. Curado, 45 years old, will take charge of the company, known as Embraer, in April. He has worked for Embraer since 1984, and has been vice president for the commercial aviation market for the past eight years. A succession plan for that post hasn't been determined.

[edit] Shareholders

Originally Embraer was 51% controlled by the Brazilian government, the remainder held by private investors. With the privatization in 1994, control has passed to three Brazilian investment groups (Previ and Sistel pension funds and Bozano Group), with each holding 20% of the voting capital. Another 20% was acquired in 1999 as part of a strategic partnership to develop advanced military aircraft by a European consortium (EADS, Dassault Aviation and Thales Group hold 5.67% each, and SNECMA holds 2.99%). The remainder was publicly traded.

The Brazilian government remained involved through the possession of a golden share (1% of capital) in the company, which allows it to veto certain deals regarding military aircraft sales and technology transfer to foreign countries.

On March 31, 2006, a capital restructuring proposal was approved, consisting of a simplified capital structure composed of one type of shares (common shares). Current capital distribuition is as follows: Bozano Group 11.10%, Previ 16.40%, Sistel 7.40%, BNDES 6.30%, Brazilian Government 0.30%, Others Bovespa 19.20%, Others NYSE 39.30%.[4]

[edit] Sites

Embraer Gaviao Peixoto facility

[edit] Main facilities

Embraer São José dos Campos (São José dos Campos, Brazil)
Embraer Eugênio de Melo (São José dos Campos, Brazil)
Embraer Gavião Peixoto (Gavião Peixoto, Brazil)

[edit] Regional sales and product support offices

Embraer North America (Fort Lauderdale, USA, Nashville, USA)
Embraer Europe (Villepinte, France)
Embraer China (Beijing, China)
Embraer Singapore (Singapore, Singapore)

[edit] Subsidiaries

Indústria Aeronáutica Neiva (Botucatu, Brazil) - manufactures the Embraer EMB 202 Ipanema, light aircraft, and various components.
EAMS - Embraer Aircraft Maintenance Services Inc. (Nashville, USA) - maintenance services site.

[edit] Joint ventures

ELEB - Embraer Liebherr Equipamentos do Brasil (São José dos Campos, Brazil) - manufactures landing gear and hydraulic systems.
Harbin Embraer (Harbin, China) - manufactures aircraft from the ERJ family for the Chinese market.
OGMA - Indústria Aeronáutica de Portugal (Alverca do Ribatejo, Portugal) - aircraft component maintenance, repair and manufacturing, plus aircraft maintenance services.