E190 Values Start to Take Note of E2

October 29, 2018

The values of the existing E190/E195 have previously been suffering as a result of the significant improvements being made by the E2 variant but the market will become increasingly difficult as existing units are retired.

The 98-passenger Embraer 190 is a member of a family of commercial jets which have now been in service for over a decade. However, in the face of competitors such as the Superjet 100 and the MRJ, the E-Jet family is beginning to show its age, hence the development of the E2. The E2 represents more than re-engining and instead incorporates a number of other improvements all of which will service to differentiate the E190 and E190E2 to the detriment of the former. The Embraer 190 was launched in June 1999 and took its first flight in March 2004. First delivery was made in 2005 to launch customer JetBlue Airways of USA. First flight of the 195 took place in December 2004 with service entry in 2006. There is a high degree of commonality between the aircraft in the 170/190 family with about 90 percent of components in common to the various models. There is also common pilot certification for all four models.

The 170/190 regional jet family has been developed through a partnership program which involves major aerospace contractors, with 16 risk-sharing partners and 22 main suppliers. Main system suppliers, Liebherr of Germany, Sonaca of Belgium and C&D of the USA, set up subsidiary operations in Brazil to establish local production. In January 2005, Embraer announced the introduction of Advanced Range (AR) versions of the Embraer 190 and 195, which have structural reinforcements in the fuselage, wings, pylons and flight control surfaces to allow higher take-off and landing weight. The aircraft have up to 555km (300nm) additional range; the range of the 190AR is 4,260km (2,300nm) and the 195AR is 3,890km (2,100nm). The Embraer 190 is fitted with two underwing-mounted GE34-10E5 turbofan engines, rated at 82.29kN. The ERJ195 is powered by CF34-10E7 engines. The E190 is available with a number of engine options which can have an appreciable impact on values. These comprise the -10E2A1; -10E5; -10E6; -10E5A1; -10E6A1 and -10E7 with the -10E7 providing the greatest premium to the standard engine.

The Embraer 190 was originally being offered in 98 and 108 passenger versions. The Embraer 190-100 and Embraer 190-200 designations were changed to the Embraer 190 and Embraer 195. To accommodate the larger passenger payload, the two versions of the Embraer 190 differ structurally from the Embraer 170 in that they have a stretched fuselage, longer wingspan, higher rated CF34-10E engines and strengthened landing gear. As a virtually all new aircraft when entering service a decade ago, the Embraer 190 had some advantages and disadvantages. The new design created problems for Embraer and service entry was delayed by a number of months. The new design saw some changes in the early years as a consequence of refinements and upgrades. The creation of the Embraer 170-190 family also prevented commonality with the existing ERJ135/145.

As the E190E2 is now in the process of being delivered to customers, it is perhaps inevitable that the appetite for the outgoing E190 and E195 should wane. The delivery rates for the E190 have stalled in the first half of 2018 as might be expected. Only five E190s were delivered in the first six months and two E195s. This compares with two E190 deliveries in the first half of 2017 and four E195s. There were also three E190E2 deliveries showing how the delivery rate will change. The E190 orderbook as of the end of June 2018 numbered 587 of which 551 had been delivered leaving a backlog of 36. Of these 24 are listed as being destined for JetBlue. Yet JetBlue has recently ordered 60 A220s – the rebranded CSeries – which will replace the 60 E190s that the airline currently operates. This leaves an effective backlog of only 14 E190s. The 24 E190 orders assigned to JetBlue will likely be cancelled at minimal cost to the airline. The delivery of these aircraft were deferred in 2013 from 2014-2018 to 2020-2022 with JetBlue at the time commenting on the on-going maintenance issues.

The future of the E190 fleet of JetBlue was always in doubt when the airline announced a fleet review in March 2017. At that time JetBlue were citing the relatively high operating cost of the E190. JetBlue were the launch customer for the E190 ordering 100 in 2003. The overhaul costs of the CF34 engine can be relatively high with on wing times being approximately 14,000 hours depending on the nature of operations, overhauls costing in excess of $1.5 million and a set of LLPs $2.1 million (25,000 cycle life). The higher than expected costs associated with the engine have been cited by JetBlue. The operations of the US airline have changed with longer routes now being considered as more relevant. The 30 owned E190s will start to be phased out in 2020 with the leases on the other 30 aircraft starting to expire in 2023. All 60 aircraft will likely have been removed from JetBlue by the end of 2025. FlyBe has also announced that its fleet of eight E195s will be retired as the airline focusses on the Dash8Q-400. In early 2018 Air Canada announced that it intended to accelerate the retirement of 25 E190s from when the A220s are due to be delivered in late 2019. The 25 E190s could be marketed by Beautech, the buyer of the aircraft, are parted out.

Air Canada, which owns all 25 E190IGWs, indicated that the A319s would be retained for longer than envisaged because of their lower operating cost. Virgin Australia, in a move announced in 2016, removed the last of its five E190s at the beginning of 2018. Some of the Virgin aircraft that were retired have been in storage for more than a year indicating that the used market is more difficult than might be expected. American also announced in 2016 that it would remove its 25 E190s by the end of 2019. Some 30 E190s are listed as being in storage and despite having been in service for only some 13 years, approximately 10 have already been scrapped. Boeing Capital Corporation has some ex-Air Canada aircraft in storage which were removed from service over two years ago. The aircraft is leased by lessors such as Nordic Aviation Capital GECAS and Avolon..


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