The big story out of the Paris Air Show this week has been the ongoing rivalry between aerospace manufacturers The Boeing Company (NYSE:BA) and Airbus. Airbus launched its new A350 plane in a bid to provide added efficiency in the widebody segment, and Boeing showed off a large version of its Dreamliner called the 787-10X. But while the biggest manufacturers compete in the widebody segment, two regional carriers are duking it out in the regional and narrowbody segments.
The regional jet makers
Away from U.S.-based The Boeing Company (NYSE:BA) and France-based Airbus lies the two largest regional jet manufacturers. Brazilian manufacturer Embraer SA (NYSE:ERJ) and Canadian plane and train company Bombardier, Inc. (TSE:BBD.B) have long been competitors in the regional jet market, and this is not expected to change any time soon.
After buying regional jet manufacturer Canadair, Bombardier, Inc. (TSE:BBD.B) has been manufacturing the CRJ series of jets, which ranges from the 50 seat CRJ200, to the 70 seat CRJ700, to the larger CRJ900. Embraer SA (NYSE:ERJ) counters with a jet to compete with Bombardier in nearly all segments in their ERJ and E Jet Series. The two planemakers also square off in the private jet market, each making their own offerings for powerful executives worldwide. Yet, this competition is set to continue into another market, and the planes that will drive the competition are expected to launch over the next few years.
Bigger than a regional jet, smaller than a Boeing 737
While Bombardier, Inc. (TSE:BBD.B) and Embraer have been content to compete in the regional jet segment for most of their modern corporate lives, both manufacturers are looking to expand into slightly larger aircraft over the next few years.
Bombardier is ahead of Embraer SA (NYSE:ERJ) in this category in its offering for this segment. The new C Series is several years and several billion dollars in the making, but is expected to take its maiden flight by the end of June. With various seating capacities between 110 and 160 seats, the C Series is trying to fill a mid-range segment with a completely newly developed-from-the-ground-up aircraft, one of the first in decades. At this stage, Bombardier, Inc. (TSE:BBD.B) has more than half of the orders to meet its 2014 production target of 300 units.
Not wanting to cede ground to its rival, Embraer is looking for a move into the larger jet segment as well. However, its new planes are meant to capture a greater piece of the 70-120 passenger segment, a combination of the existing regional segment and the lower end of the C Series segment. Reuters is reporting that Embraer SA (NYSE:ERJ) is looking to fill this segment with a next generation version of its larger series of E Jets. In this way, Embraer is not developing a completely new plane and instead modifying an existing model with updated technologies and more rows of seats in a plane expected by 2018. This strategy has met success at other manufacturers such as The Boeing Company (NYSE:BA), which has received solid sales for its next generation 737s and the latest 737MAX.
Larger planes, more competitors
The Boeing Company (NYSE:BA) and Airbus are the strongest players in the widebody and larger narrowbody segments, and this presence has earned them top positions at the Paris Air Show as investors and airplane enthusiasts search out the latest aeronautic technologies. But regional jet manufacturers Bombardier, Inc. (TSE:BBD.B) and Embraer SA (NYSE:ERJ) are moving into territory at the smaller end of The Boeing Company (NYSE:BA) and Airbus’ markets. Both regional jet manufacturers have seen success in their current markets, and the skies ahead contain the potential for greater revenues by taking a piece out of the lower end of the biggest manufacturers’ segments. Will the planes take off on time? At this point we don’t cannot know for sure. But whether or not one is an investor in Bombardier, Inc. (TSE:BBD.B), Embraer, The Boeing Company (NYSE:BA), or Airbus, the paths taken by these two regional jet manufacturers could change both the aerospace manufacturing and airline industries over the next several years.
Alexander MacLennan owns shares of Bombardier, Inc. (TSE:BBD.B). The Motley Fool recommends Embraer SA (NYSE:ERJ)-Empresa Brasileira.
The article Keep an Eye on this Regional Jet Maker Showdown originally appeared on Fool.com.
Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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