By Todd Benson and Cesar Bianconi
SAO PAULO (Reuters) - Brazilian aircraft maker Embraer plans to unveil a new executive jet this year, its latest foray into the lucrative private plane market, the company's chief executive said on Tuesday.
The new plane will target a niche between two other corporate jets in Embraer's product line -- the Legacy 600, which can carry up to 16 passengers, and the nine-seat Phenom 300, which will take to the sky in 2009.
"We have big plans in executive aviation," Mauricio Botelho, Embraer's chief executive and chairman, said at the Reuters Latin American Investment Summit in Sao Paulo.
"Our strategy is to take on the competition by offering products with the latest technology and more competitive operating costs."
Botelho said the new jet will not be based on any other planes in its product line. Instead, it will be an all-new design, though he declined to provide further details.
Embraer (EMBR3.SA: Quote, Profile, Research, Stock Buzz)(ERJ.N: Quote, Profile, Research, Stock Buzz), the world's fourth-largest commercial jet maker, has been investing heavily in recent years in the executive jet sector in a bid to diversify its revenue base.
"Executive aviation is an area that allows for better profit margins than commercial aviation," said Botelho, who will stay on as chairman of the board after retiring as chief executive on April 23.
The flagship of Embraer's private jet line-up is the popular Legacy 600, which began flying in 2002 and now also comes in a shuttle version. On Thursday, Embraer is scheduled to deliver its 100th Legacy 600.
More recent additions to Embraer's executive jet portfolio include the Phenom 300 and the slightly smaller Phenom 100, with luxurious cabins designed by BMW Designworks. Embraer is also developing a large-scale private plane modeled after its 190 regional jet called the Lineage 1000.
Embraer already has close to 400 firm orders for the Phenoms, which were added to the product line less than two years ago but have yet to go into operation. The revenue from those initial sales is already enough to cancel out what Embraer spent to develop the Phenoms, Botelho said.
Executive jet sales currently make up about 15 percent of Embraer's revenue, which is dominated by regional jets for commercial airlines. Botelho said the company expects executive jets to account for 20 percent of revenue in five years.
Embraer, short for Empresa Brasileira de Aeronautica, finished 2006 with a firm order backlog totaling $14.8 billion. About $12.5 billion of that amount comes from commercial planes, $1.5 billion from executive jets, and the remainder from military aircraft.
NO THREAT FROM BOMBARDIER
Embraer's foray into the executive jet market comes after it emerged as the world's leading producer of regional jets with 70 to 110 seats -- a niche where it has faced little competition in recent years.
But that may change. Bombardier Inc. (BBDb.TO: Quote, Profile, Research, Stock Buzz) of Montreal, Embraer's archrival in the regional jet market, announced last month that it would begin producing a stretched version of one of its commuter planes that can seat up to 100 passengers. Continued...
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