Will Embraer develop a competitor to the Airbus A320 and Boeing 737? Embraer is currently exploring the possibility, but it is one that carries huge risks for the company. These are the sort of decisions that make or break companies, or at least companies the size of Embraer. Its market capitalization is currently around $5 billion, and it holds about 3.6% of the global commercial aviation market share. It is unclear what a future Embraer narrowbody airliner would look like, but it would likely be a tube-and-wing design.

The possibility of Embraer building a next-generation narrowbody aircraft is very uncertain. It would have to compete with future Airbus A320 and Boeing 737 replacements. Even if the US (and potentially Europe) refuse to allow China’s COMAC to compete in their markets, a future Embraer narrowbody would likely have to compete with the C919 or other COMAC aircraft in many markets. Another open question is whether the next-generation aircraft that will replace today’s narrowbody aircraft will be blended-wing-body aircraft.

An Extremely Risky Move

Currently, the world’s narrowbody market is essentially a duopoly between Boeing and Airbus, with the 737 and A320 family, respectively. It is a challenging market to penetrate with extraordinarily high barriers. The most recent cautionary tale was Canada’s Bombardier, which developed the CSeries. Even though it successfully developed the aircraft, the strain was too much for the company, and it was forced to sell not only the CSeries to Airbus. Even worse, it sold its CJR commuter jet and its Dash turboprop series.

Instead of making Bombardier a larger player in the regional commercial jet market, the development of the A220 pushed it out. Now, a reduced Bombardier concentrates on its business jets. Russia’s Yakovlev MC-21 and COMAC C919 are not comparable to what Embraer is contemplating, as these are national programs with state backing. China boasts the world’s second-largest aviation market, and it can compel its airlines to purchase the aircraft. Chinese airlines have already reportedly placed as many as 1,000 orders for the jet.

A limiting factor for China is the dependence of the C919 on Western components. Something similar is happening with Russia and its MC-21. Hobbled with sanctions, Russia has little alternative but to produce its own commercial aircraft. Once these aircraft are fully russified, Russia could export them to other sanctioned countries like Iran and North Korea. Russian engines are underpowered, more expensive, and have fewer flight hours compared with their Western counterparts. These Russian jets are unlikely to be competitive, except in markets barred from purchasing aircraft with Western components.

Boeing’s Prolonged Crisis Creates An Opportunity

Still, amid Boeing’s ongoing series of crises, Embraer is exploring options to enter the commercial aviation market’s biggest market. According to a Wall Street Journal report, Embraer has assessed that it has the technological know-how and manufacturing base to develop a next-generation narrowbody airliner.

The report says that such an aircraft would compete head-on with the successors of Boeing’s 737 and Airbus’s A320. Both of those giants are in the early stages of replacing their popular narrowbody aircraft types. More on that later. The MAX crisis is having a series of other knock-on effects. For example, the expected dates for the FAA to give the type certificate for the Boeing MAX 7 and MAX 10 have now been delayed to 2026, and the expected date for the type certificate for its Boeing 777X is now 2027.

This is set to create a production gap for the 777 as the final 777-300ERs were likely delivered in 2024, and the final 777Fs are set to be delivered in 2026. Making matters worse, this is distracting Boeing from developing new clean-sheet aircraft, such as the much-touted New Midsized Airplane (dubbed the 797). That new aircraft has fallen off Boeing’s list of priorities as it faces a cash crunch and prioritizes getting its MAX 7, MAX 10, and 777X back to the market and ramping up Boeing 737 and 787 production.

Embraer Still Small Fry

Any Embraer narrowbody would take years to develop and likely wouldn’t enter service until the mid-to-late 2030s. For now, it is not Embraer’s plan, and it is currently focused on selling its existing models. Embraer could use the aspects of its E2 regional jet in a future narrowbody airliner. The WSJ quoted Gus Kelly, the chief executive of AerCap, as calling the prospect a « long shot.« 

Kelly added, « And even if it does come off, I don’t think it will be relevant for the next 15 years. » It should be noted that Embraer’s plans are still in their infancy, and no final decision has been made yet. That said, Embraer is currently laying the groundwork for such an endeavor, including assessing potential payload and range requirements. There are those at Embraer who feel the ongoing turmoil at Boeing is creating an opportunity.

Another potential disadvantage Embraer has is that it is based in Brazil. Boeing and Airbus (and now COMAC) benefit from being based in the world’s largest economies, and the companies are seen as a matter of national security in those countries. Canada-based Bombardier found out the hard way when Boeing took it to court on anti-dumping charges after it secured a life-saving contract with Delta Air Lines for its CSeries. Part of the fallout has led Airbus to set up an assembly line for the CSeries/A220 in Alabama.

Boeing And Airbus Starting On Next-Gen Narrowbody Airliners

Boeing believes it could launch a new narrowbody aircraft on a similar timeline to that expected for Airbus’ A320 successor. But that remains to be seen. Boeing is in need of money, and it would take around $50 billion to replace the 737 MAX, an amount the giant just doesn’t have at present.

Airbus is planning to bring a successor to the A320 to the market in the mid-2030s. The future aircraft is expected to feature next-generation CFM International RISE open fan engines and would boost fuel efficiency by 20% to 25% compared with its Airbus A320neos currently on the market. Airbus is also considering stretching the A220 and developing a hybrid aircraft for shorter hauls.

It should be noted that while the 737 and A320 have been dramatically upgraded, the 737 is still a fundamentally 1960s design, and the A320 is a 1980s aircraft. The Boeing 737 was designed with shorter landing gear partly because engines in the 1960s were smaller and airport infrastructure was lacking. This is partly why Boeing 737 engines have flat bottoms, and is a core reason for the MCAS software that caused the MAX crashes.

JetZero Is An Unknown Quantity

JetZero is a California-based startup with a contract to build a blended-wing-body demonstrator for the United States Air Force. JetZero has ambitions to develop the military aircraft into a commercial airliner with 250 seats and a range of 5,000 miles. The aim is for the aircraft to be disruptive and to reduce fuel consumption by up to half compared with today’s jets.

JetZero is building the demonstrator in partnership with Northrop Grumman. Northrop Grumman is one of the largest aerospace companies in the world, with a market capitalization rivaling that of Airbus and Boeing. JetZero claims the aircraft could « more effectively serve everything from single-class short-haul to four-class international, with one plane. » The company benefits from being based in the US.

JetZero is currently planning for the first full-scale flight in 2027 and has selected Greensboro in North Carolina, for its first factory. Notably, it has attracted investments from United Airlines, Delta Air Lines, and Alaska Airlines. It remains unclear whether JetZero can build a blended-wing-body aircraft capable of rivaling or disrupting conventional tube-and-wing aircraft. Still, the aircraft can be regarded as a wildcard with disruption optional.

Embraer Lacks A Major Economic Backer

In the aviation industry, it is important to keep in mind that politics and geopolitics are ever-present. Western sanctions on Russia wreaked havoc on its commercial airliner industry, while China’s C919 remains vulnerable to the same sanctions. For example, it has the Franco-American CFM International LEAP engine. On the one hand, COMAC has powerful state backing; on the other hand, it is doubtful the US will ever issue a type of certificate for the jet. Even Canada’s Bombardier wasn’t spared from trade barriers and politics.

Aviation history is strewn with failed and expensive airliner projects, including recent examples. In 2023, Mitsubishi Heavy Industries abandoned its 16-year-long effort to develop a new regional jet. Airbus lost billions on developing the Airbus A380 Superjumbo, as its 251 sales were not enough to recover its investment into the aircraft. However, Airbus is a much larger company than Embraer and is better positioned to absorb painful shocks.

Still, there could be an opportunity for Embraer to burst onto the scene with a next-generation narrowbody airliner, while Boeing remains mired in crisis. At the same time, the US sees Boeing as a vital industry and could easily frustrate Embraer’s endeavors should it feel its place in the narrowbody market was threatened. After all, around 40% (including the engine) of the components of Embraer’s E-Jets are supplied by US-based companies.