Aug. 13 (Bloomberg) -- Embraer SA, the maker of small and mid-size business jets, is considering whether to jump up into a new market by building a bigger, long-range model.
Fresh off regulatory approval of the medium-size Legacy 500, the Brazilian manufacturer is looking at large-cabin planes that would position Embraer to take on competitors in all the segments of the industry, the head of the private-jet unit said yesterday.
“To play in executive aviation, it needs to be a clean-sheet design,” Embraer’s Marco Tulio Pellegrini said in an interview at the Latin American Business Aviation Conference and Exhibition in Sao Paulo. “In order to compete in the other segments, you need to bring the best in class. It’s not enough just to have a face-lift.”
Offering a jet with intercontinental range would thrust Sao Jose dos Campos-based Embraer into a niche that includes General Dynamics Corp.’s Gulfstream and Bombardier Inc. Embraer’s lineup includes the small Phenom model and business aircraft derived from its signature regional jets.
The market for large jets had proved to be a sustainable one, and Embraer is careful to do market research and gauge the interest before it builds new products, said Peter Skibitski, an analyst at Drexel Hamilton LLC in Atlanta.
“If you think about global trade and globalization in general, that could be a big factor in this market continuing to grow long-term,” Skibitski said in a telephone interview.
The Legacy 500 and smaller 450 expand Embraer’s lineup in the mid-size category after the planemaker introduced the Phenom last decade. The Legacy 500 won approval yesterday from Brazil’s aviation regulator to start operations.
Large jets are defined as those weighing more than 50,000 pounds (22,700 kilograms), according to the General Aviation Manufacturers Association trade group. The mid-size category runs from 12,500 pounds to 50,000 pounds.
While the Legacy 500 can seat as many as 12 people and fly 3,000 nautical miles (5,600 kilometers), a top-of-the-line large model like Gulfstream’s G650 can take 18 passengers and has a 7,000 nautical-mile range, enough to go nonstop between New York and Beijing. That globe-hopping capability has made the G650 a favorite among corporate chief executive officers.
Bombardier plans to add two larger models to its Global line of business jets in 2016 and 2017 to accommodate growing demand. The Global 7000 and 8000 models will be able to hold as many as 19 passengers and will have a range in excess of 7,000 nautical miles, said Annie Cossette, a spokeswoman for Bombardier Business Aircraft.
“These new planes were specifically launched because of the growth in that ultra-long-range segment,” said Cossette, who declined to comment on Embraer’s plans. “That’s the market segment that will be subjected to the highest growth in the next 20 years, especially because of the increase in activity from emerging countries.”
Steve Cass, a Gulfstream spokesman, declined to comment on Embraer’s plans.
In May, Gulfstream introduced a longer-range version of its G650, which will be able to travel 7,500 nautical miles, 500 nautical miles over the current model, which entered into service in 2012.
Embraer had an 18 percent share of the worldwide business-jet market last year, compared with about 3 percent in 2008, according to the company and data from the General Aviation Manufacturers Association.
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