Embraer and Mitsubishi face uncertainty in the US market, as their new aircraft, the E175-E2 and MRJ-90 do not meet the current scope clause requirements
Embraer and Scope Clause: Hybrid Production
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April 7, 2018 - AirInsight
Embraer and Mitsubishi face uncertainty in the US market, as their new aircraft, the E175-E2 and MRJ-90 do not meet the current scope clause requirements in the major airline pilot union contracts. These contracts are up for re-negotiation in 2019 to take effect from 2020 to 2025, just as these new aircraft arrive in the market. With a new hybrid assembly process, Embraer has de-risked the potential for scope clauses, whether they remain the same or change.
Should the scope clauses in the US change to accept the new aircraft, regional airlines would be able to fly them in the US. But if they do not, the aircraft will be too large under the current contract and need to be operated by the major airline crews, who are typically more expensive than regional affiliates.
Nonetheless, outside of the US, both the E175-E2 and MRJ-90 will find potential customers who could take the airplane immediately, but would still need to sell compliant models in the US. While Mitsubishi does not currently make a compliant model, Embraer's E175 has had an 85% share in US regional jet orders over the past five years, and remains a popular choice with regional airlines.
Embraer's John Slattery estimated that there are 600 regional jets that will be required for replacement and growth over the next contract cycle, and that to ensure Embraer is well positioned to deliver either the existing or new aircraft, they have developed a hybrid assembly line that can accommodate either aircraft type.
New Aircraft Brings Opportunity for Manufacturing Change
The hybrid facility is...