Aerospace: Dogfight

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A decade ago, few would have guessed Embraer would be Bombardier's main competitor in the regional-jet business. But Embraer's 1994 privatization heralded Brazil's new push to be a global economic player. To exploit the late-'90s boom in worldwide regional-jet travel, Botelho committed Embraer to lighter, faster, farther-ranging and less expensive jets, which proved attractive to airlines even though they weren't--and still aren't--considered as technologically advanced as Bombardier's. Says Doug Abbey, executive director of the Regional Air Service Initiative, an industry advocacy group in Washington: "Embraer is the risk-taking company that Bombardier used to be."

A boon may be coming soon for both companies: US Airways, which just emerged from bankruptcy protection, has announced that it is negotiating with them and anticipates placing "a significant order in the near future." Other airlines are expected to follow suit as their pilots' unions--which complain that regional-jet pilots earn about one-fourth as much as large-jet pilots--reluctantly agree to relax the ceiling on the number of regional jets the airlines can use. That's just the kind of small thinking the regional-jet rivals need to hear. --With reporting by Sol Biderman/Sao Paulo, Robert Brehl and Steven Frank/Toronto and Linda Gyulai/Montreal