Podcast: Can Embraer Scale Up Services To Match Record Backlog?

Embraer has just logged a record $29.7 billion backlog. Listen in as Aviation Week Network editors Lee Ann Shay, James Pozzi and Lindsay Bjerregaard discuss how the aircraft manufacturer is expanding its global maintenance, training and manufacturing capabilities to meet growing demand.

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James Pozzi: Welcome to the MRO podcast. I'm James Pozzi, MRO editor for the EMEA Region. And today we are looking at Embraer's commercial aircraft and their aftermarket in commercial aviation. Embraer has the third largest fleet of aircraft globally behind Boeing and Airbus. The Brazilian manufacturer has a healthy commercial order backlog and has been fine tuning its aftermarket network both internally and externally over recent years, especially with the E-Jet E2 variant growing in volume in the global fleet. So joining me today, our colleagues, Lee Ann Shay, executive editor of MRO and Business Aviation at Aviation Week, and Lindsay Bjerregaard, managing editor MRO at Aviation Week. Lee Ann, Lindsay, great to have you both back on the podcast. So I'll start with Lee Ann. Embraer hit a order backlog record last week. What's some of the numbers you can share and what does it tell us I guess, about the Embraer fleet in the mid to long term?

Lee Ann Shay: Thanks for that question James. Before I get into the second quarter numbers that just came out, I wanted to put the Embraer fleet in perspective like big picture. I looked at Aviation Week's Fleet Discovery and there are about 4,000 in service aircraft. So those aircraft that are not parked during storage. And breaking that down again in big kind of picture numbers, there are about 1,900 commercial jets, 100 commercial propeller aircraft, 1,700 business jets of a little over 50 business propeller aircraft and roughly 200 defense propeller and jet aircraft. So if you look at the second quarter numbers that Embraer just put out for deliveries, they delivered 61 total aircraft. The biggest bulk of that came on the executive aviation side at 38 jets, 19 commercial aviation aircraft and four in defense. And it's interesting to point out that those 61 aircraft deliveries represent a 30% higher delivery figure than the same quarter in 2024.

James Pozzi: Very interesting. Yeah. And what about the aftermarket? Of course Embraer is growing that internally and with partners, but any numbers related to the aftermarket from those quarter earnings?

Lee Ann Shay: Absolutely. The big headline in the Q2 delivery and order numbers was that Embraer logged its largest backlog in the second quarter at $29.7 billion. And yes, that's billion with a B and of that big backlog, a little over 13 billion goes for commercial aviation, 7.4 billion for executive aviation, 4.3 for defense. And the part we're talking about this podcast, 4.9 billion, so roughly 5 billion in service and support. And again, this is another headline of that 4.9 billion service and support backlog that is a 55% increase year over year. Yes, five five. So growing that business from 3.1 billion to 4.9 billion year over year. That is impressive. That is huge. And part of that growth is helped by its new maintenance facility in Texas, which CommutAir is the launch customer, but also its parts pooling program customers are growing including customers from France, Australia, Montenegro and Mongolia. So all around the world. Regional One also ordered two more of the E-190 passenger to freighter conversion. So that backlog really represents good stuff all across its business.

James Pozzi: Yeah, very interesting, Lee Ann and good to get a good snapshot of those different segments and particularly worth mentioning the passenger to freighter segment, which sometimes gets overlooked I think in regards to Embraer. Lindsay bringing you in of course, obviously North America is the world's largest region in terms of Embraer fleet volume. What kind of more insights could you give us about the aftermarket side and maybe how Embraer is expanding that, not just in that region but maybe beyond North America as well?

Lindsay Bjerregaard: So Lee Ann touched on this a little bit, right? She talked about their Fort Worth facility. So in June, Embraer opened a new $70 million facility at Perot Field Alliance airport there. So right now they're starting operations in an existing hangar there. They're in the process of building a second hangar that's set to be open in 2027, but that is Embraer's 13th owned service center. And Embraer has said that this new facility should increase its services capacity in the US by 53%. So they're planning to hire around 250 or create 250 new aviation jobs there. And it's worth noting that two days after they opened that facility, they announced their first maintenance customer, which is CommutAir, which Lee Ann had mentioned. So they'll be providing MRO services for CommutAir's ERJ-145s there. This is more on the executive aviation side, but it is worth noting that Embraer also within the last year or so recently opened three new MRO facilities in the US for business jets.

So those are in Dallas, Cleveland, and then Sanford, Florida. And they're also planning to double their capacity for executive jets at Le Bourget in France by 2027. We had also mentioned the pool program. I won't list off all of the airlines, but a lot of customers have been signing up for that for Embraer's inventory management offerings over the last couple of years. And when I spoke to Carlos Naufel, who is the president of Embraer Services and Support last summer, he said that at that time more than 180 E-Jets had joined the pool program since the prior year. So they're definitely building up sort of the spares and supply chain solutions as well. But then beyond the US, it looks like Embraer is really trying to set up new partnerships and infrastructure on the services side around the world. So in April they signed an MOU with the government of Morocco to explore potential joint projects in a bunch of different areas. Manufacturing Composites, MRO training programs. They established a fully owned Indian subsidiary in New Delhi. They're looking at E2 production opportunities in Turkey. Last year they opened new authorized service centers in Asia, which include SIA Engineering Philippines and Fokker Services Asia. And then James, I know you're going to talk a little bit more about this as well, but they're also planning to make Poland the home of their center of excellence in Europe. So that's going to focus on a variety of areas, manufacturing and assembly, MRO, passenger-to-freighter conversions, advanced air mobility and that kind of stuff. But James, I know you had a lot more to say about Europe, so maybe we can move to you on that.

James Pozzi: No, that was interesting. Lindsay, of course I know they're majority owned Portugal-based subsidiary OGMA. They've obviously been certified since 2022. But obviously as you mentioned, LOTAMS is the first authorized service center. That wasn't really a surprise I guess given the historical links between LOTAMS and of course its former airline affiliates, LOT Polish Airlines, of course the flag carrier of Poland. Obviously they've operated Embraer aircraft for more than 20 years, think going back to 2004. And LOTAMS had that existing capability as a result of the ERJ-145s for around 20 years. And then the E-Jets aircraft in 2012, they got their capability for that. So yeah, that looks like a big operation for the reasons you mentioned. I think they've got about five bays at the moment in their operation for E-Jet maintenance and they obviously want to add more to service that fleet E2 variant, which is obviously growing since coming to service in 2018.

One layer of the aftermarket or a substantial layer of the aftermarket worth mentioning I think can bias of course with my engine hat on, that's the engine market of course. It's obviously the Pratt and Whitney, GTF, the PW1900 variant of course is the engine on the E2. And that's seen some pretty significant MRO players add that capability in recent times in the Middle East, early this year in Abu Dhabi. SANAD added capability for that. They're obviously ramping up a lot for the GTF engine variants in general. There's a lot of investment going on there. ITP of course who we reported on extensively about becoming part of the GTF network that was announced coincided with the Paris Air Show this summer. The variants they all focus on obviously the PW1500 for the Airbus A220 and the PW1900 for the Embraer E2 variant.

So yeah, new players are joining that side and that engine market of course will be pretty significant given that that's the option. But even going back to the older variants, the E1 family, the previous variants of the aircraft, of course that's the CF34 engine manufactured by GE Aerospace. There seems to be plenty of aftermarket activity predicted for that as well of course with those engines maturing. So yeah, the engine market is obviously smaller than other programs that we know and cover so much, but that's also significant and worth mentioning as well. Okay, so we've gone over the aftermarket and the fleet. Back to Lindsay. I think it would be a bit remiss if we didn't finish this podcast and mentioned some of the talent and workforce initiatives Embraer are doing of course, because you need the people and the skills to maintain the operation and accommodate the future growth. You've reported a fair bit on this over the last year. What's some of the interesting things Embraer's doing on the people side of things in relation to this?

Lindsay Bjerregaard: So some of those MOUs, like the regional country-based MOUs I mentioned earlier, those specifically state that training is a potential cooperation area. So for example, the ones that they signed with Morocco's government and then Saudia Technik in Saudi Arabia, they're planning to work together when it comes to training and MRO and that sort of thing. Last year Embraer also launched a mechanic training program in Brazil called GIFT, which stands for Guiding and Inspiring Future Technicians. So they said that was driven by their growing need for more qualified talent in the region. And that is a three-year program where students will get both classroom training and then hands-on training opportunities at Embraer's facilities. And the last I'd heard they're hoping to expand that program to other locations, but then they're also working with CAE, the training provider on training for eVTOL pilots, maintenance technicians, and ground handlers.

That's part of, we could probably have a whole other podcast related to sort of the advanced air mobility side with their Eve subsidiary. But then they're also working with CAE on the pilot side on flight simulators. So they just began operating a new E2 full flight simulator in Madrid that is supposedly the first such simulator to support the E2 family fleet in the EMEA region. And then last year Embraer also opened the Asia Pacific region's first E-Jets E2 simulator in Singapore and then launched a new full flight simulator in the UK for the Phenom 300s. So there's a lot of activity happening there, a lot of it with CAE, but certainly with all of this extra work that they have coming up in their services portfolio, I suspect we'll be hearing a lot more too.

James Pozzi: Yeah, no doubt in that area and many of the other areas we discussed today seems there's even more to cover even. There's been a lot of, I guess, additions and growth in a relatively short amount of time. Speaking of relatively short amounts of time, that brings us to the end of the podcast. And Lee Ann and Lindsay, thank you so much for packing a lot of great insights and information and details into those 15 minutes.

Lee Ann Shay: Thanks for having us. Thanks James.

James Pozzi: Brilliant. Well don't miss the next episode by subscribing to the MRO podcast wherever you listen to podcasts. And one last request. If you're listening in Apple Podcasts or Spotify and want to support this podcast, please leave us a star rating or write your review. And just one more thing, a shout out to Cory Hitt for producing this podcast and making us sound great. Thank you Cory. And thank you to the listeners.