ERJ Embraer SA

By Robert Wall 

DUBAI--An unusual order drought at the Dubai Air Show and difficult economic conditions in some key plane-buying-markets isn't denting aircraft makers' interest in boosting production with the demand in the U.S. and China proving resilient.

Orders for planes in places like Russia and Brazil has slumped as a sharp drop in exports in these countries has buffeted their economies and knocked demand for air travel. And conditions could be worsening in other countries, too.

Boeing's chief jetliner salesman John Wojick said: "We are starting to see some of that impact in other commodity-dependent countries."

And that view is echoed at competitor Airbus. Still, chief plane salesman John Leahy said planned production levels at the European plane maker are sustainable, barring everything but a major economic downturn. Airbus last month said it would raise single-aisle aircraft output to 60 a month from 42 today.

If the global economy weakened, Airbus would likely be able to hold production levels steady, not have to curtail them, Mr. Leahy said.

China also remains resilient despite a slowdown in economic growth. "The Chinese economy may be sliding, but that's not true for aviation, at least not yet," Mr. Leahy said. He remains confident in long term prospects and argues global air traffic will double more quickly than the historical 15 years.

Boeing's Mr. Wojick said: "We think we can weather any potential perturbations in the marketplace."

The Chicago-based plane maker, which is considering raising its own narrow-body output from the planned 52 aircraft a month from 2017, would do so only if it is certain the higher build rate was sustainable for several years, he said.

With airlines and Brazil, Russia and other markets struggling, plane makers are eying deals from the U.S. where airlines this year are headed for record profits, benefiting from lower fuel prices and restructuring measures.

"In the U.S. we continue to see really strong demand," Mr. Wojick said.

That's a view shared also by smaller plane makers.

Brazil's Embraer SA, the world's third-largest plane maker, is in talks with major U.S. carriers to buy some of its regional jets seating more than 100 passengers, further cementing its position in the world's largest airliner market. "There is a huge opportunity for us," said Paulo César de Souza e Silva, who heads Embraer's commercial airplane unit.

Embraer in recent years enjoyed sales success from U.S. airlines including American Airlines Group and United Continental Holdings Inc., who placed orders for smaller versions of its planes. United has indicated it could place an order for the 100-seat regional jets from Embraer or rival Bombardier Inc.

A breakthrough deal for Embraer could come within the next six months, Mr. César said, without identifying the potential buyer. That could open the door to other deals. " If one airline orders 100-seaters, the other airlines will look at doing the same," he said in an interview at the Dubai Air Show.

Rival Bombardier is hoping to win over some of those customers for its CSeries narrow-body jets, said Fred Cromer, president of the company's commercial airplane unit. Bombardier is targeting Canadian approval for the first of its new CSeries planes, the CS100, still by year-end, with the slightly larger CS300 that seats about 130 passengers following about six months later.

The two smaller plane makers also are looking to raise output. Mr. César said 2016 deliveries could top the 100 planes the company expects to build next year. Bombardier will ship around 20 CSeries planes next year and then gradually boost output to around 120 a year around the decade's end.

Economic woes aren't entirely bad news for plane makers, either. For Embraer, the fall in the value of the Brazilian currency has provided a financial tailwind since the company has many of its costs in the local currency even as it sells planes in dollars.

Still, Mr. César said the plane maker is reluctant to pass that on in pricing discounts out of concern the currency trends could reverse. Embraer suffered when the Brazilian currently rapidly appreciated during the country's economic boom.

Write to Robert Wall at robert.wall@wsj.com

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(END) Dow Jones Newswires

November 09, 2015 12:32 ET (17:32 GMT)

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