Embraer’s Junior on KC-390 Program, Brazilian Air Force Delivery, Future Market, Boeing Partnership

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Walter Pinto Junior, the vice president for programs at Embraer Defense and Security, discusses the upcoming delivery of the first  KC-390 transport to the Brazilian Air Force, the plane’s capabilities, the global market for new tactical air-lifters, Embraer’s partnership with Boeing to market the new jet, and how the commercial and military sides of the Brazilian company have helped shape development of civil and military products with Defense & Aerospace Report Editor Vago Muradian. The interview was conducted at the 2019 Paris Air Show at Le Bourget outside the French capital where our coverage was sponsored by Bell and Leonardo DRS.

Vago Muradian:  Welcome to the Defense and Aerospace Report.  I’m Vago Muradian here at the Paris Air Show at this historic airfield in Le Bourget.  Our coverage here this week is sponsored by Bell and Leonardo DRS.

It’s our honor to have our first interview with Walter Pinto Junior who was the KC-390 Program Manager, but now you are the head of all Embraer’s Defense Programs. So congratulations on the promotion.

Walter Pinto Junior:  Thank you. Thank you very much.  And thank you for coming.

Mr. Muradian:  It was an absolute pleasure.  We had a flight, just like we started the last Paris air show, it was a flight aboard the KC-390.  This time it was great.  This one is a production airplane that’s going to be delivered to the Brazilian Air Force.

Walter, walk us through, this plane was supposed to have been delivered late last year, but there was the stall issue that you guys had, which kept you from going to the Farnborough Air Show.  Talk to us about where the program is now, what the delivery schedule is going to be.

Mr. Junior:  This airplane is serial number 4 from our production line.  It’s going to be the first one to be delivered to the Brazilian Air Force.  Our expectation is as soon as this airplane is back to Brazil after the show, we will start the delivery process.  So it’s together with the Brazilian Air Force, all the documentation, the acceptance process will take place.  It probably will take a month or so.  It’s the first delivery for them so it’s a lot of learning how the documentation process works, but we are very happy that this will be delivered in a couple of months from now.

Mr. Muradian:  And it’s 28 airplanes is on the initial order.  What’s the delivery schedule going to be like?  How many a month are going to be delivered, for example, to the Air Force?

Mr. Junior:  So the 28 aircraft is the contract of buy 28 aircraft is up to 2026. How many aircraft per year we will deliver is confidential information because it’s strategic information from the Brazilian government.  But what I can tell you about this year, we are planning to deliver two airplanes. This first one, and the second one is going to be by the end of the year.  Then, from now and then we are flexible.  Our production line can deliver up to 12 airplanes a year, so we can accommodate any request that the Brazilian Air Force may have.

Mr. Muradian:  There are more orders, we just heard from Jackson Schneider, the CEO of the company, was optimistic there were going to be a lot more airplanes that were going to be coming because there are partner nations that you have on the program as well.  Portugal, for example, has said that it’s interested in five airplanes, if I remember. Chile is interested in five airplanes as well.  And if you look at it, Argentina is partnered on the program.  [Aerovotahodi] of the Czech Republic is on the program as well. I’m missing one other person who’s also a partner.

Mr. Junior:  We have a strategic partnership between Brazil, Argentina, Portugal and Czech Republic. So all those four countries are strategic partners.  But we are seeing movement from the market not only from those strategic partners.  So we have progress.  We are close to entering into service.  So the market will start looking at us.

So after the civilian certification we could realize some more movement from the market, interested to know more about the airplane.  I think it’s a matter of time that with the delivery and the airplane showing the capability under the Brazilian flag, so it will show the potential and the market will even increase.  So we are as Jackson mentioned, so we are seeing a lot of interest already, a lot of requests.  There are some countries that we are not there at the [onset] stage, and we are very anxious to give more good news very soon.

Mr. Muradian:  Civilian certification.  How long is that process going to take and when is that finished?

Mr. Junior:  The civilian certification was already finished by October last year, so the airplane is certified by all the commercial requirements, [ANAC] requirements. It’s almost the same as the FAA and [the AZA].  So we are now working on the military certification, so we are showing how the mission capability, the compliance of the mission requirements and military requirements.  So we are progressing very well.  As an example, we perform all the airdrop, loads missions. We showed compliance with all the Brazilian requirements, so the airplane doesn’t have to pass any airdrop anymore, but there are other military missions that we have to show compliance. But the major ones will be showing requirements up to the end of the year.

Mr. Muradian:  Let’s talk a little bit about the market and how many of these airplanes you expect to build and deliver.  If you look at that class of airplanes, there are about 2700, 3000, you had an exact number in the briefing.  What was the exact number?

Mr. Junior:  No, we were talking about how many hours we were flying.

Mr. Muradian:  Got it, okay.

Mr. Junior:  Not how many planes.

Mr. Muradian:  I’m sorry, that’s right.  You did chime in with hours.  But it’s about 3,000 airplanes that are in this tactical class.  Most of them are C-130 aircraft.  Most of them are a little bit on the older side, around 30 years old.  So you guys see a great opportunity.

But if you’re looking at that 3,000 number, what’s the number you expect to build?  Do you guys have a number, hey, 600 of that market or 1,000 of that market?  What number are you putting on the number of airplanes you guys are going to be able to get to?  Because Jackson also mentioned that you guys can also increase, you know, your 12 a year is predicated on current standard production rates.  The facility and the facilitization you guys are going to can surge if you put more people against it.  And now there are about 1,000 people in the company that are focused on this program.  What’s the size, the number of these airplanes that you think you’ll be delivering say over the next 10, 15, 20 years?

Mr. Junior:  When we launched the program we saw the potential, so we saw how the market was there.  The older C-130s that would come to the final life of them and the needs of replace is there. But we target not only the operators of the C-130, we target any Air Force that needs tactical medium transport, multi-mission aircraft.

So I think we bring a new standard to the market, a new technology that we will capture markets beyond what is available only for replacing the C-130.  So it’s a multi-mission airplane.  So that can perform several different missions from cargo transportation up to the inflight refueling systems.

So I think the market is there.  So we, as Jackson mentioned, we are prepared to up to 18 a year, so then you see how optimist we are.

Mr. Muradian:  I can see you’re optimistic, but you guys have succeeded in every other airplane you’ve developed, especially for the commercial market where you guys are partnered, obviously, with Boeing now, and there’s a joint venture on the commercial aircraft side.  And you also have a partnership on this airplane with Boeing as well, which I want to get to in a minute.

But talk to us about the difference between the airplane we flew at the last Paris Air Show.  You had the prototype.  You then had two pre-production airplanes.  This is number 4 which is the first production airplane.  Talk to us about how the airplanes are different.

Mr. Junior:  The number 3 and number 4, this one, are pretty much the same airplane.  Those are production units.  So the number 3 joined the flight test certification because also we need to find a configuration to all the airdrop tasks.  So all the cargo handling [inaudible] of this airplane or airplane number 3 is the same as this airplane.  So we didn’t have to do any modifications, any adaptations to be very realistic on how the serious production would look like.  So that gave us an advantage on the flight test campaign that number 3 joined.  So the one that you flew, the number 3, is exactly the same as the number 4.

Mr. Muradian:  That makes it a lot easier.  Nothing different there.

What was the specific issue when you guys had that stall problem during flight testing that was the delay?  Walk us through what the problem was and what the solution was.

Mr. Junior:  It’s a combination what happened in there.  When our flight test campaigns, we put the airplane in a very extreme angle up. So we test the airplanes in the most severe conditions and of course there are some risks that we mitigate and the airplane behaves like we expect it to behave.  So we didn’t have to do any change on the systems or the structure, anything on the airplane because of the incident there were learnings in there but not learnings on the product side.

Mr. Muradian:  If you’re looking at customers around the world, what’s the value case that you’re making?  For example, for somebody who has more demanding needs, they may want an airplane like this.  But for others, a lot of analysts who are friends of mine say well, why wouldn’t a 295 be enough for a guy who, you know, a nation that has not as robust airlift needs as this.  Then there’s the pricing on the C-130, you know, Lockheed I think is very aggressive and wants to make sure that it’s selling its airplane as well.

Do you guys think that you’re priced right in the marketplace right now in order to get those sales that you guys want?

Mr. Junior:  I think this airplane arrived in the market, shaked the market.  So the competition see that we are serious on that and it’s a very potential and important competitor on the arena.  So we bring a huge advantage in terms of the technology, the platform, our airlift capacity, the speed, the performance.  So we can complete missions that the competition can’t.  So that, of course, we will shake the market and we will try to compensate that in a price tag.

So we have to be very efficient and provide a total solution that makes sense to the customer. Not only on the acquisition price, but it’s the total package.  The training side, the support, logistics and sustaining as well.  So I think we are very competitive not only the price but also on the product characteristics.

Mr. Muradian:  You guys have been very clear about what the advantages are.  For example over the C-130, you guys are a twin engine turbofan, that’s a four engine.  Obviously they’ve refreshed it with the J, but this is a brand new airplane with a lot of commercial technology that you put into it and I want to ask you about that. But Kawasaki also has come out with an airplane.  They launched it before you did, but yours was flying; very, very similar in some respects.  Talk to us about how you guys look at that part of the competition and what do you think your strengths are in the market compared with the Kawasaki C-2?

Mr. Junior:  I think again, our avionics, our full flight [bilateral assistance] in a closed loop, an active [side] stick as well give less workload to the pilots to perform and be focused on the mission.  And also the mission computer, how it was conceived to be integrated with the avionics, with the software developed by Embraer, like the fly by wire software as well, give us more flexibility to accommodate any change that needs to improve the airplane during the development campaign.  So we were able to give an airplane that is much more efficient in terms of completing the mission.  So our efficiency will stand up, and also the speed and how we can deliver the same load faster than the competition.

Mr. Muradian:  Two questions, because I know yo’uve got to go.  First, there’s a lot of commercial technology in this but there’s also a lot of unique military technology.  Talk to us about what you drew from the Embraer commercial heritage, and then what you’re developing new that’s going to go back into the Embraer commercial products which is your flagship, the foundation of the company.

Mr. Junior:  One example is the flight by wire systems.  So we start with the E-Jets and then when we moved to the [Zed-2] jet, like the Legacy and Creators, so we took that technology and then we raised the bar and we bring some more functionalities to the [Zed-2] jet market.  From that we bring to the KC, now as I just mentioned, the full flight by wire systems with active side sticks.  So that’s one example of technology that we brought.

But also the experience on the commercial side with airliners, that they are driven by operational cost.  They are driven by maintenance costs.  So we took all that experience of developing reliability system to the KC.  So the KC has the lowest maintenance cost of the market, the lowest operational cost.  Because the systems were developed with that mindset.  Availability, low maintainability and low cost of maintainability.  So that’s another example, what we have brought from that.

We are giving back, so we don’t know because we don’t have a new platform being developed on the commercial side right now.

Mr. Muradian:  Have you guys ever said what your cost per flying hour yet is?  Do you want to make some news now and tell us what your cost per flying hour is?

Mr. Junior:  No.  We haven’t. I think we will soon give more details on that.

Mr. Muradian:  I’m looking forward to it.

Now let’s talk, last question, on your partnership with Boeing.  That’s something you guys have been working on for a long time, both on this side of the program but also on the commercial aircraft side of the program. Talk to us where you guys are in that process.  Jackson said you guys are going to be picking a name for that.  But also how the duties and responsibilities in this, how are you dividing the workload with Boeing?

Mr. Junior:  By now we are on the preparation phase, we’re in the planning phase.  So we cannot do anything together besides planning for the future.  We need to wait for all the regulatory authorities to approve the deal, then we can start operating together.  But the goal and the vision is to collaborate in the marketing of this aircraft.  I think what Boeing brings to value to this product is to open a market and use all the influence of Boeing in the market.

So we are in the planning phase.  We can’t say anything else by now because we would be jumping in an arena that we are not able to say.

Mr. Muradian:  Walter Pinto Junior, the head of Embraer’s defense business.  Sir, thanks very much.  And next time I’m going to talk to you about a whole bunch of other things aside from the KC-390.  Always a pleasure.  Thank you.

Mr. Junior:  Thank you very much, and have a good show.

Mr. Muradian:  I’m looking forward to it.  Same to you.  And it was a great way to start it by flying on the airplane.  It’s a beautiful plane.  Best of luck with it.

Mr. Junior:  Thank you very much.

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