Embraer Bizjet Sales Surge in 2019, Deliveries Continue

Embraer had a strong sales year in its business jet division but a $71.6 fourth-quarter impairment charge in the unit and charges associated with the Boeing joint venture helped contribute to a company-wide net loss of $322.3 million in 2019, company executives reported today. This comes despite a leap in revenues from $5.07 billion in 2018 to $5.46 billion last year, with business jet revenues up 26.5 percent on the year.

The Brazilian manufacturer reached the top end of its 2019 guidance with 109 business jet deliveries and, importantly, CFO Antonio Carlos Garcia noted that the company did not carry white tails into 2020. Backlog for Embraer Executive Jets climbed to $1.4 billion, up from $800 million a year ago.

While Embraer said it has not received cancellations nor has its supply chain been notably slowed from the effects of the Covid-19 travel restrictions, the company is holding off providing guidance for 2020 until it has a better sense on the full ramifications of the crisis. It has had discussions, primarily with airline customers, about potential deferrals on deliveries into next year. But CEO Francisco Gomes Neto added that the business jet side has seen less of an impact, and the company, in fact, not only secured sales this past week but also made a couple of deliveries.

Relief Bill Sets Aside Billions for Aviation Industry

The U.S. Senate’s unanimous passage of the massive stimulus package late last night sets the stage for billions in loans and grants to flow to cash-strapped air carriers, including Part 135 operators, along with numerous other aviation businesses. The Coronavirus Aid, Relief, and Economic Security (CARES) Act heads to the House for approval. 

Senate passage of the act followed days of intense lobbying from across the industry involving thousands of calls and letter-writing campaigns. In the end, lawmakers specifically are directing almost $80 billion in loans and grants for certain aviation segments, as well as $10 billion in airport grants with $100 million set aside for general aviation facilities. Further, they set aside a loan pool of $454 billion that might be available to states, municipalities, and businesses in general, including aviation entities.

Grants provided to airlines and other businesses are specifically for employee salaries and benefits. The act would provide up to $25 billion in grants to commercial passenger carriers, including Part 135 operations. Other grants include $4 billion to cargo carriers and $3 billion for contractors, which could cover FBOs providing ground handling for airlines and caterers, NATA said. The loans provide another $25 billion for commercial carriers (including Part 135) and Part 145 MROs and $17 billion for aviation entities involved in national security, primarily aimed at Boeing.

Foley: Downturn Will Be ‘Softer Blow’ for Bizjet OEMs

Business aviation analyst Brian Foley argues that, despite the sharp downturn in aviation activity because of the Covid-19 pandemic, business aviation is poised to better weather this setback than during the 2008 financial crisis. The U.S. economy is healthier this time around, with a GDP of 2.1 percent, higher corporate profits, and a stock market that is up 67 percent compared with the financial crisis, Foley wrote today.

Financial system reforms since then have also strengthened banks’ reserves and led to tighter lending standards that have increased their liquidity and reduced the risk in their loan portfolios. While business jet OEMs have smaller backlogs, “they aren’t stacked with as many speculators” and “some manufacturers have put added teeth in their contracts since the last downturn, aimed to keep airplane flippers out of their books.”

Foley acknowledges, however, that now—unlike in 2008—there are too many new business jet models chasing a finite buyer’s market. International markets were weak before the pandemic and no additional interest rate cuts are in the offing because the Fed already has cut them to zero. “It’s said that the second half of 2020 may be more forgiving, but the wait will admittedly be excruciating,” Foley noted. “While there’s always a worst-case scenario, it’s possible that the positives going into this downturn will at least help to soften the inevitable blow.”

VistaJet Offers Covid-19 Support

VistaJet has come up with some new ways to keep business rolling against the massive disruption presently being meted out on the world by the Covid-19 pandemic. The company, which operates Bombardier Globals and Challenger 350s, is providing “complimentary empty leg flights for governments, medical organizations, and health experts” in light of the lack of airline services, and believes its global infrastructure can help move critical medical products in the light of cargo capacity being seriously curtailed.

The company said it is “working directly with governments and consulates around the world, helping them to repatriate citizens by providing complimentary empty leg flights.” It is, in addition, assisting with the “complex logistics of the necessary permits and paperwork.”

“This is an unusual time and one that we must all work together where possible to do whatever we can to help. We know we don’t normally offer repatriation flights or the transportation of medical equipment, but ultimately, we are a logistics company and we are here to help the global community as much as we can,” said founder and chairman Thomas Flohr.

He said all VistaJet crews are checked for signs of the virus twice a day and each VistaJet aircraft is sanitized after every flight.

Aboulafia: Large-bizjet Demand Could Fall 20% in 2020

Large-cabin business jet demand could drop 20 percent later this year as a result of the Covid-19 pandemic, while the light and midsize segments could “hit a new low,” according to Teal Group v-p of analysis Richard Aboulafia. “Watch fuel prices—resource-rich countries and energy-extraction companies drive large-cabin demand, so that segment will likely be hit the hardest,” he said. “Large cabins are clearly in very dangerous territory. All of the market indicators are either orange or red.”

Aboulafia expects the light and midsize business jet segments to be down only modestly from current demand since they never really recovered from 2008. “For the past decade I've argued that we're not at risk of a small-/medium-cabin downturn, because we never had any kind of sustained post-2009 recovery,” he told AIN. “We're about to see if I was right. I'm starting to suspect that I was not right.”

Meanwhile, the anecdotal upsurge in private aviation demand “whenever something bad happens to airlines (pandemic or terror)…has never proven to be sustainable,” Aboulafia wrote. “In fact, business jet demand gets clobbered by crashing equities markets and corporate profits.”

As far as manufacturers, “Bombardier looks uniquely vulnerable in the business jet industry,” he said. “They’re overwhelmingly reliant on high-end jets, with no exposure to defense markets. Two months ago, this wasn’t a problem, but it now looks bad."

Embraer To Make Ventilator Parts To Combat Covid-19

Embraer will manufacture parts for the ventilator and respirator industry under a coalition of companies and research centers that aims to increase the availability of equipment and solutions to combat Covid-19 in Brazil. It will also work to help develop high-efficiency filtration systems that could turn regular hospital beds into intensive care beds and portable respirators.

“A group of professionals has already been leading initiatives in support of a respirator factory in Brazil, with a plan to start the production of parts next week, in response to the emergency demand for this equipment,” the aircraft manufacturer said. “Embraer, in cooperation with partner organizations, has already completed the technical and production capacity analysis required to meet the identified needs.”

It is also working to provide technical support for the development of biological air filter systems for hospital beds, employing efficient filters already used in air conditioning systems on Embraer aircraft. Another of the company’s work fronts is dedicated to analyzing the manufacturing process of control valves and flow sensors for another respirator manufacturer in Brazil, in addition to adapting an existing respirator model for combating Covid-19.

“Embraer will keep monitoring the situation to find ways to contribute by using its expertise integrating complex systems for the benefit of the society in this worldwide cooperation to combat Covid-19,” the company said.

ForeFlight 3D Preview Labels Now Live

Electronic flight bag developer ForeFlight released a new version of its iOS app on Tuesday, adding more features to the 3D Preview and other capabilities. The new preview features facilitate visualizing and briefing approaches, as well as entire flights from start to finish, but now with a glidepath to the runway and fix markers and speed/altitude restriction labels.

To use the new 3D Preview features, users can either create a flight and view the preview for the entire trip or preview just an approach procedure when it is part of the flight plan. The 3D Preview’s new fix markers and speed/altitude restriction labels are shown only on the approach procedure fixes, but not on arrival or departure procedure fixes.

When previewing a flight, the screen allows two “camera” views of a depiction of the route line, either exocentric (from behind and outside the airplane) or egocentric (as if viewed from inside the airplane). Users can pan, tilt, and zoom the camera view as well.

With either the approach or the entire flight in 3D Preview, users can “fly” along the route or the approach using a play button. The playback function at the bottom of the 3D Preview can also be used to scroll through the flight or approach, and this also shows all the fixes and the times based on a flight plan.

Bristow Flying Covid-19 Patients

Bristow Group is transporting suspected Covid-19 patients in three specially-configured former search-and-rescue (SAR) helicopters in the North Sea and other of its aircraft in the Americas. Three people with suspected Covid-19 cases have been flown in SAR Sikorsky S-92s from offshore energy installations in the North Sea since March 18.

Bristow has also transported acutely-ill offshore workers in the oil and gas industry with suspected Covid-19 in specially-configured SAR aircraft supporting operations in the Gulf of Mexico, Trinidad and Tobago, and Guyana in operations that began there on January 29. Related flights there have included 24 transports of offshore workers and Covid-19 test kits to remote and isolated offshore platforms, drilling rigs, and drill ships.

Helicopters used for these missions have undergone specific modifications to ensure the necessary separation is provided between flight crew, onboard medic, and passengers with suspected Covid-19. Each aircraft is decontaminated after every flight, a process made easier due to the waterproof seating and floors installed for the helicopters’ SAR configuration. 

Bristow also is providing expertise to the UK industry’s pandemic steering group and the company is prepared to assist industries other than oil and gas throughout the UK “as the national response to the coronavirus outbreak gathers pace.” The company is similarly prepared to expand transport of Covid-19 patients in the Americas.

Important Events Note

While there have been many cancelations and postponements of important events during the Covid-19 crisis, AIN remains committed to covering the business aviation industry. Please send any news and press releases, especially related to events you had been planning to attend, to ctrautvetter@ainonline.com and we will endeavor to help share your news. The Thursday AINalerts calendar will resume after event schedules firm up following the coronavirus pandemic.