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The regional airliner market declined 5.1% by value last year. Much of this weakness was due to the transition between Embraer’s E-Jet E-1 Series and the E-2, which first arrived last year. But there are several secular trends that are also damaging this segment, with a -5.2% compound annual growth rate (CAGR) in 2014-2018 and a -3.1% CAGR in 2008-2014.
Topline output continues at near record levels. Key segments look set for growth through the next three years, at least. There are areas of concern, and not all manufacturers will benefit equally, but overall the industry is in excellent shape.
World industry output in 2017 came to just over $180 billion. Deliveries in 2014-2016 have all been at about this level in constant 2018 dollars (2015 was the all-time record, at $183.5 billion).
To paraphrase Churchill, for decades I've had my own ideas about Embraer, and I didn't want them changed by any Embraerians. I'd always respected Embraer, as does much of the aerospace industry – if aerospace companies were restaurants, Embraer would be the restaurant all the other chefs visited on their days off – but until this month, I'd never visited São José dos Campos.
The decision to surrender control of the CSeries to Airbus represents the final stage of a 12-year long slow-motion story that’s best described as a noble and heroic farce. Bombardier, Canada, and Quebec bit off way more than they could chew. Poor management and decision-making compounded this reality. Once Airbus and Boeing re-engined and upgraded their single-aisle models (as a reaction), the CSeries didn’t stand much of a chance. Since the CSeries began in 2006 and through the decision to surrender, Airbus and Boeing racked up 17,264 single aisle jetliner orders (8,104 Boeing, 9,160 Airbus). The CSeries got 360.
This new entrant challenge has induced very different reactions by the two legacy regional jet market leaders. One is reinventing itself to survive, while the other seems content to gradually fade away.