COMPASS MAGAZINE #11
COMPASS MAGAZINE #11

A HERITAGE OF INNOVATION EMBRAER IS DRIVEN TO SUPERSIZE ITS CUSTOMER EXPERIENCES

Brazil’s Embraer has gone from a newcomer in the business jet marketplace to one of the aerospace industry’s dominant share leaders in just eight years. Ask any Embraer executive how they’ve achieved so much in so short a time and they’re likely to give a one-word answer: innovation. Here’s a look at how they do it.

In the eight years since Embraer began delivering jets designed specifically for business aviation, the Brazilian company has achieved a seamless progression of improved products that has established it as one of the world’s most innovative aerospace enterprises.

In 2008, the Phenom 100 became Embraer’s first “clean-sheet” (all new) design in the entry-level jet category. Developed in parallel, the slightly larger Phenom 300 entered service in 2009 with innovations that included the largest baggage compartment, largest windows and lowest cabin pressurization in its class.

“The Phenom 100 revolutionized the entry-level segment when it set new standards for comfort, performance and operating costs,” said Marco Tulio Pellegrini, president and CEO, Embraer Executive Jets, “and the Phenom 300 was just as disruptive.”

“EMBRAER HAS BUILT ONE OF THE BEST AIRPLANE DESIGN TEAMS IN THE INDUSTRY. THEY HAVE A REPUTATION FOR DOING THEIR HOMEWORK, LISTENING TO THEIR CUSTOMERS AND LEARNING FROM THEIR MISTAKES AS WELL AS THOSE OF OTHERS.”

RON EPSTEIN SENIOR AEROSPACE AND DEFENSE ANALYST, BANK OF AMERICA MERRILL LYNCH

Buyers noticed. Within two years of entering service, the Phenom 100 was the industry’s most-delivered business jet. Between 2013 and 2015, the 300 laid claim to that achievement. The Phenom 300 has captured 54% market share in the light-jet category for Embraer, a major accomplishment against larger, more established rivals.

CULTURE OF INNOVATION

Ask any Embraer executive how they did it, and it’s likely their answer will include one critical word: innovation. “Embraer’s culture of innovation has been driven by the need to be competitive internationally, without the safety net of a large domestic market or overprotective government,” said Antoine Gelain, managing director of London-based independent private equity firm Paragon European Partners and aerospace industry practice leader at Candesic, a London-based strategy and management-consulting firm. “This culture still pervades what they do today and will be even more important as more competitors emerge.”

Embraer began exploring the business aviation market in 2000. Leveraging years of engineering expertise gained by manufacturing aircraft designed specifically for regional airlines, the company introduced the super-midsize Legacy, built on the same platform of its Embraer Regional Jet (ERJ) 135. Engineers took the fuselage of the 37-passenger commercial airliner, increased its range and gave passengers inflight access to the largest baggage compartment of any business jet at the time.

“EMBRAER’S CULTURE OF INNOVATION HAS BEEN
DRIVEN BY THE NEED TO BE COMPETITIVE INTERNATIONALLY, WITHOUT THE SAFETY NET OF A LARGE DOMESTIC MARKET OR OVERPROTECTIVE GOVERNMENT.”

ANTOINE GELAIN MANAGING DIRECTOR, PARAGON EUROPEAN PARTNERS

Encouraged by the Legacy’s success, along with growing market demand for business aircraft, Embraer fully committed itself to business aviation in 2005.

“Embraer has built one of the best airplane design teams in the industry,” said Ron Epstein, an aerospace engineer by training and now senior aerospace and defense analyst at Bank of America Merrill Lynch. “They have a reputation for doing their homework, listening to their customers and learning from their mistakes, as well as those of others.”

TECHNOLOGY INVESTMENT

Embraer’s heritage of aircraft innovation, its leaders say, comes from a sustained commitment to high levels of investment in technology, coupled with new approaches to design and manufacturing processes.

For example, the Phenom 100 was the first business jet designed using efficiency protocols, co-developed by industry and the US Federal Aviation Administration, to simplify aircraft maintenance and reduce operating costs.

“EMBRAER THINKS STRATEGICALLY IN ALMOST
EVERYTHING IT DOES, AND THAT’S NOTABLE IN THE CURRENT ERA OF SHORT-TERM VALUE CREATION.”

BYRON CALLAN DIRECTOR, CAPITAL ALPHA PARTNERS

Embraer follows a 15- to 20-year technology roadmap that is updated annually. The strategic blueprint is based on research generated by each of Embraer’s business units based on forecasts of product demand, as well as direct outreach to customers on their preferences for everything from galley configuration to seat pitch. Embraer uses the roadmap to help guide management in selecting projects that will be rewarding for both the company and its customers.

Starting in 2008, Embraer developed the clean-sheet Legacy 450 and Legacy 500, which reflect the same design philosophy: more value in the form of larger cabins, faster speeds and better passenger and cargo-carrying capacity, all at a lower price than competing aircraft.

For example, the Legacy 500 is marketed as a ‘super- midsize’ airplane, but the aircraft actually competes against larger business jets costing millions more, said Mauro Kern, chief operating officer, who also is responsible for engineering and technology.

In 2017, Embraer expects to certify a derivative of the Phenom 100, the Phenom 100 EV, that will deliver even greater operational capability while preserving the 100’s low operating and maintenance costs. For example, Pellegrini said, redesigned engines will provide up to 15% more thrust, dramatically improving the aircraft’s range to reach some of the world’s most inaccessible airports.

A REVENUE ENGINE

In 2015, more than 40% of Embraer’s revenues were derived from innovations implemented since 2010, Kern said. For example, the Legacy 450 set new and higher standards for passenger comfort, cruise speed and systems technology in the entry-level super-midsize market segment, according to Fred George, chief pilot at Business & Commercial Aviation magazine, who puts new models through their paces and writes detailed pilot reports.

“Embraer thinks strategically in almost everything it does, and that’s notable in the current era of short-term value creation,” said Byron Callan, a director at US-based Capital Alpha Partners, a strategic policy advisor to financial institutions around the world.

SEATING PRIORITY

One of the best illustrations of Embraer’s long-term commitment to advancing innovation is its US$26-million Engineering and Technology Center in Melbourne, Florida. The facility, which opened in 2015, conducts R&D for product and technology development across Embraer’s business, commercial and military aircraft lines.

Initially, its primarily focus is on designing and assembling rapid-prototype interiors.

“In business and commercial aviation, interiors – seats, soundproofing, connectivity, fresh air circulation – are a competitive differentiator,” Kern said.

Seats are considered particularly important because business jets must double as productive offices in the sky. To ensure it can offer the market’s best seats, Embraer made two strategic moves in 2015: it acquired California-based Aero Seating Technologies, which produces some of the highest quality seats for private and commercial aircraft; additionally, rather than outsource its design and production to a supplier, Embraer built a seat- manufacturing facility near its Engineering and Technology Center. Together, these investments ensure that Embraer controls every aspect of the furnishing that, more than any other, determines cabin comfort and customer satisfaction.

Discerning buyers of business aircraft appreciate that dedication to innovation and quality.

“As Mexico’s premier air-charter solutions provider, our customers expect a world-class experience,” said Pedro Corsi Amerlinck, chief executive officer of United Arab Emirates-based Across Aviation, one of two launch customers of the Phenom 100 EV. “Now, with the addition of the Phenom 100 EV to our fleet, our customers will enjoy such an experience.”

by Tony Velocci Back to top