Embraer projects market demand for over 1,500 new jets of 70 to 130 seats for Europe and the CIS

Embraer released at the European Regions Airline Association (ERA) Annual General Assembly, held in Berlin, Germany, its market outlook for Europe and the Commonwealth of Independent States (CIS). The Company forecasts that these markets will demand 1,540 new aircraft deliveries in the 70 to 130-seat jet segment (valued at some US$72bn at list prices) over the next 20 years. This is the second largest market worldwide for the segment with a fleet growing from 740 to 1,560 units by 2034. The report points out that in Europe, the focus on long-haul premium passengers is now close to absolute which, in turn, reinforces the importance of jets in the 70 to 130-seat segment to feed international flights. Traditional full-service carriers restructured in order to improve efficiency and reduce costs. The poor financial performance is not the result of weak traffic growth or load factors since RPK (Revenue Passenger kilometers, which is a measure of the volume of passengers carried by an airline) growth was solid at 5.8% in 2014 and the aggregate load factor was over 80%. However, pricing power for European airlines has declined significantly as supply has consistently outpaced demand. Yields have been decreasing 2% annually over the last 5 years. There is a further need for structural changes, business consolidation and capacity management. Hub feeding and differentiation of services to attract business passengers are options that will require right-sized aircraft in the 70 to 130-seat segment.