Word: embraer
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Dates: during 2000-2009
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...Though Embraer's 2002 revenues of $2.5 billion were less than a third of Bombardier Aerospace's, the smaller firm has captured more than a third of the regional-jet market after entering only seven years ago with its 50-seat ERJ135 and has become the fourth largest aircraftmaker. The rivalry involves two of the best-run companies in the hemisphere, yet each side protests that the other doesn't play fair because it relies on taxpayer subsidies. Embraer says it needs government help to counter Bombardier's easier access to First World financing and technology; Bombardier says...
...irritating as they are, the subsidies, which mostly take the form of government loan guarantees, are a sideshow to the main contest, as Bombardier and Embraer jockey for position in a market that, while stagnant today, is expected to soon explode with demand. Ailing airlines of all sizes around the world have come to rely more and more on smaller, lower-maintenance regional jets--instead of clunky turboprops or inefficient larger craft--to connect hub cities with smaller markets. Airline-industry analysts say regional jets are key to many airlines' survival...
Both Bombardier and Embraer are gambling big money on ever larger regional jets. New 90-plus-seat models, the Bombardier CRJ900 (rolled out in January) and the Embraer ERJ190 (expected next year), cost each firm nearly $1 billion to develop but might face competition from Boeing's and Airbus' smallest models. Bombardier and Embraer are also beefing up international operations, especially in jet-hungry China. Embraer last year launched a $25 million joint venture to build 50-seaters in China for that market. Bombardier is in negotiations with other Chinese partners to build 70- and 90-seat jets...
...fates of the regional-jet makers and the airlines are intertwined as never before. Since the fall of 2001, Bombardier Aerospace has laid off nearly 8,000 employees worldwide, or about 22% of its work force, and Embraer more than 1,800 (almost 10%), as many existing orders have been postponed or converted into purchase options. Revenue is down significantly for both companies, and it was an ominous sign when a major competitor, Germany's Fairchild Dornier, filed for bankruptcy in April 2002. Embraer's usually brash CEO, Mauricio Botelho, 59, last month observed in nervous executivespeak, "The aerospace market...
Investors feel the same way. Embraer stock has fallen from the high $30s before the 9/11 attacks to about $13 in recent days. Shares in Bombardier are stuck below $3, down from about...