Embraer: The Brazilian Aircraft Manufacturer's Turnaround and Growth
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Case Details:
Case Code : BSTR243
Case Length : 31 Pages
Period : 1969-2006
Pub Date : 2007
Teaching Note : Available
Organization : Empresa Brasileira de Aeronáutica S.A
Industry : Aerospace
Countries : Brazil
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"Embraer is one of the hottest manufacturers in the
industry today. They're willing to push into areas that others haven't
explored."
- Donald Burr, the founder of People Express Airlines1,
in 2004.2
"A lot of people have tried and failed. But since 1960
only one new company and one new country have successfully entered the
commercial aircraft market."
- Richard Aboulafia, an analyst at the Teal Group
Corporation3, in 2005.4
"Years ago our competitors said: 'How dare those ugly
ducklings from South America try to sell a jet in the Northern Hemisphere'
Fortunately, they underestimated us."
- Satoshi Yokota, Embraer's Executive Vice-President for
Engineering and Development, in 2006.5
Embraer Launches New Business Jet
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In May 2006, Empresa Brasileira de Aeronáutica S.A. (Embraer) announced the
launch of its new business jet, the Lineage 1000 (Lineage). The Lineage's design
was based on Embraer's successful E-190 regional passenger jet6
platform, and the aircraft had the capacity to seat between 13 and 19
passengers, depending on the cabin design. The cabin could be split into five
zones, and customers could choose from a variety of interior design options,
which included putting in a standup shower and a full-size bed. The Lineage was
a long haul plane, with a range of 4,200 nautical miles.
Embraer called the Lineage an 'ultra-large' business jet, and was expected to
position it against the Boeing Business Jet7.
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The first Lineage aircraft, which was priced around $41
million8, was scheduled to enter service
in late 2006.
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The Lineage was the newest addition to Embraer's
range of business jets, which included the Legacy 600, the Phenom 100,
and the Phenom 300. As of mid-2006, Embraer was the fourth largest
aviation company in the world (in terms of aircraft deliveries), behind
Airbus SAS (Airbus), The Boeing Company (Boeing), and Bombardier
Aerospace (Bombardier) (Refer Exhibit I for a note on the aviation
industry and the profiles of major aircraft manufacturers). In addition
to business jets, Embraer also manufactured commercial, military and
agricultural aircraft (Refer Exhibit II).
Embraer was set up in the late 1960s, as a public sector enterprise by
the Brazilian government. |
Embraer: The Brazilian Aircraft Manufacturer's Turnaround and Growth
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