Embraer to Lose Market Share on Competition From Asia

 Empresa Brasileira de Aeronautica SA, the world’s fourth-largest aircraft maker, expects its share of the global market for regional jets to decline as companies in China, Japan and Russia develop competing products.

Embraer, as the company is also known, expects its market share for such jets to fall to 40 percent within the next five years from 54 percent last year, Executive Vice President Mauro Kern said in an interview today in Singapore. The Sao Jose dos Campos, Brazil-based company still expects to remain the market leader, he said.

Commercial Aircraft Corp. of China, or Comac, and Japan’s Mitsubishi Aircraft Corp. are among planemakers that will challenge Embraer for orders for planes with 120 seats or less, Kern said. Asian companies are developing small, fuel-efficient jets as demand for short-haul flights increases in the world’s most populous continent.

“They will bite some slice of this market,” Kern said today, referring to Comac’s ARJ21 aircraft and Mitsubishi’s MRJ. “These airplanes will have penetrations in their domestic markets.”

Embraer’s orders fell for a fourth time in five quarters as demand for new planes fell amid the global recession. The company delivered 244 jets in 2009, beating its target of 242.

Mitsubishi Jet

Mitsubishi, developing Japan’s first passenger jet in more than three decades, already has 65 firm orders for the 70- to 100-seat regional jet, and a total of 125 including options, Marketing Director Yugo Fukuhara said last month.

The company is aiming to win customers outside its home market this year as it works up a client base before the industry rebounds.

Comac in 2008 won its first overseas regional-jet order, worth about $750 million, from General Electric Co. The 70- seater ARJ21 is a key step in China’s bid to develop an aerospace industry able to compete in the worldwide aircraft market.

Embraer’s backlog of airplane orders dropped to 265 last year from its pre-crisis level of 400 in 2007. The company does not expect plane order to return to pre-crisis level until 2013, Kern said.