Embraer Has A Big Problem

Embraer is warning of a major potential issue that could affect its orders and deliveries if a resolution cannot be reached.

The Brazilian manufacturer says that, with tariffs being implemented, it would face a persistent threat of order cancellations and delays in delivering existing units to customers.

Speaking with Bloomberg, the planemaker’s Chief Executive said there have been no cancellations to date, but the business is preparing for such an event amid political uncertainty.

Since President Trump took office, there has been a persistent threat of tariffs worldwide; some have been implemented, and others are pending as part of ongoing trade deals. What this forces companies such as Embraer to do is prepare for the worst-case scenario and hope for the best.

Embraer says that zero tariffs are necessary because fewer aircraft would be produced if a deal could not be struck, all driven by the plane maker’s dealings with the United States.

Current estimates from the planemaker’s chief executive officer are that, if tariffs were to go ahead, a further 2 million USD would be added to each aircraft; these figures would eventually stack up and impact the business.

With Embraer keen to grow what is now a record backlog as airlines continue to look to its product to power their business, the possible impact and its long-term ramifications would be far from ideal.

A Busy Period For Embraer

Talk of tariffs follows a busy month for Embraer, which has made a couple of landmark announcements in the United States as it looks to increase its grip on this market.

The Brazilian planemaker is aware that it has a unique opportunity: despite a strong backlog, it can offer a product available sooner than Airbus and Boeing jets, and with renewal coming up for many airlines, it feels it’s now or never to push the E2.

Firstly, the manufacturer saw a significant announcement by Avelo Airlines in September, which marked the E2 program’s development in the United States for the first time.

The order, which consisted of up to 100 planes, was headlined by the 50 firm purchases alongside rights for a further 50 should the airline wish to activate these at a later date, a strong contract for Embraer and for them a hopeful sign of what’s to come with the primary competition coming from the A220.

Away from commercial orders, Embraer also announced the groundbreaking of a new facility in the United States to enable future growth.

The state-of-the-art MRO, which includes Maintenance, Repair, and Overhaul services, will be located in Fort Worth and is ideal for commercial jets, with an opening planned for 2027, subject to no delays.

Embraer says the investment will create 250 skilled jobs in Texas moving forward and sees the investment capping out at US $70 million when the project is formally completed, executives calling the move an honour.

This is just one part of the investment with Embraer, based on the belief that this figure will grow into the hundreds of millions if all pans out as intended across not just its commercial divisions but also its defence programs.

With all this in mind and Embraer’s strong intent to grow moving forward in the United States, the persistent threat of tariffs, and now the possibility of the impact from delays in aircraft deliveries and order cancellations, threaten to hurt the business beyond belief.

As a result, Embraer will be working tirelessly with Brazilian politicians, alongside the United States, to reach a mutually beneficial deal that gives the planemaker the best chance to move forward with growth in a sustainable and secure environment.