News / Embraer eyes integrator customers as it moves smartly into freighters

Move over Airbus and Boeing, there is a new freighter on the block, set to rival the 737.

And the large integrators in the US and China are expected to trigger demand for Embraer’s recently launched E190F and E195F passenger-to-freight conversions.

“We have been in close contact with dedicated air cargo operators and the big integrators because of their influence and role on the e-commerce market,” Rodrigo Silva e Souza, VP marketing at Embraer told The Loadstar.

China has one of the most developed markets, in terms of domestic air cargo operations driven by e-commerce, and the US is home to major integrators.

However, other regions, such as Latin America, Europe and Africa, are considered as important, with e-commerce and online shopping trends strongly increasing in these regions too, especially after the disruption caused by Covid.

“Moreover, since our E-Jet footprint spreads to all continents, it has enabled us to reach out to operators offering a flexible and right-sized product to explore potential markets in different regions of the world,” said Mr Silva e Souza.

The demand for freighters continues to grow and Embraer looked at several scenarios, including the environmental credentials of current narrowbody freighters that are aged, highly polluting and well within their retirement window.

In return, the cargo sector is closely observing post-conversion freighter values and lease rates for various aircraft types that are ripe for conversions and certainly, smaller jets have already started their value recovery.

Embraer said it designed the E190/E195F to meet the “changing demands of e-commerce and modern trade that require fast deliveries and decentralised operations, and to fill the size gap between turboprops and larger narrowbody jets”. It claims the E-Jet freighter will have over 50% more volume capacity, three times the range of large cargo turboprops and up to 30% lower operating costs than narrowbodies.

According to Embraer, the new variants will be a cost-effective option when replacing the older 737-300F, given its volumetric capabilities.

“Boeing will naturally promote the larger 737-700 and -800 for such operations, although we understand that these will not be able to address these markets – especially for agile e-commerce – as efficiently as E-Jets,” said Mr Silva e Souza.

There are more than 1,600 E-Jets delivered globally, so the clear benefit for new operators of the freighter version is a well-established, mature, global services network that Embraer already has in place.

Industry trends have shown that, usually P2F converted aircraft present consistent higher residual values than passenger variants of the same vintage.

“This behaviour can be observed in several past, similar P2F projects, and it makes sense given the fact that it aggregates the value of the conversion into the asset.”

In addition, Mr Silva e Souza highlighted the increased life cycle of the freighter compared with the passenger version (the conversion may extend the economic life of the aircraft by at least 10 to 15 years) and encourage the replacement of passenger versions by more efficient, sustainable and quieter aircraft.

“Additionally, a P2F programme has an important role of better balancing the availability of pre-owned aircraft in the market, which tends to maintain residual values in a higher level,” he added.

Data from Embraer reveals worldwide demand for small and crossover jets (up to 20t weight capacity) over the next 20 years is about 700 aircraft.

“We conservatively estimate a 20% capture of this market, given the fact that we are still new to this specific market.”

In terms of feedstock and materials, there are about 700 E190/195-E1 currently in operation and some of these have started to reach maturity for conversion.

Mr Silva e Souza revealed that Embraer had been in close contact with dedicated air cargo operators and the big integrators, and had leveraged its good relationship with many of the lessors and airlines currently developing and expanding their operations with full cargo aircraft.

Entry into service is expected in early 2024.